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Cirrus, VLSI report earnings

The firms' first-quarter earnings exceeded Wall Street's expectations, but both chipmakers say challenges lie ahead--prompting VLSI to cut 190 jobs.

Cirrus Logic and VLSI Technology yesterday posted quarterly earnings that exceeded Wall Street's expectations, but both chipmakers said challenges lie ahead--prompting VLSI to cut 190 of its 2,390 workforce.

Cirrus warned that it would post a revenue decline next quarter. The Fremont, California-based company posted net income of $516,000, or 1 cent per share, for the three months ended June 27, down from $2.48 million, or 4 cents a share, reported for the like quarter a year ago. According to First Call's, consensus of analysts' estimates, the chipmaker was expected to post a break-even quarter. Cirrus posted quarterly revenue of $177.9 million, down from $201.6 million.

"The results of our first fiscal quarter are in line with our previously stated expectations of reduced revenue due to a product transition within our storage business, as well as our gradual move away from the PC motherboard space," Cirrus chief executive Michael Hackworth said in a statement.

Hackworth cautioned, however: "We anticipate a further decline in our storage business as key customers appear to be experiencing reduced demand in certain product lines and greater-than-expected industry pricing pressures. As a result, we expect revenues to decrease for that division, and, consequently, for the company as a whole, in the next quarter."

Meanwhile, VLSI said it posted net income of $6.5 million, or 14 cents a share, for its second quarter, down from $12.3 million, or 26 cents a share, reported for the like quarter a year ago. First Call had forecast VLSI to earn just 9 cents per share. Quarterly revenue rose to $137.8 million, down from $170.9 million posted for the year-earlier period.

VLSI chief executive Alfred Stein said the quarter's decline was due to adjustments in the company's inventory as well as "worldwide softness" in the chip industry.

"Despite the resulting business uncertainties, we maintained reasonable profitability by meeting our revenue goals, executing well in manufacturing," and reducing costs by 10 percent, he said.

VLSI said the job cuts will result in a third-quarter charge of between $5 million to $7 million. After the layoffs, about 10 percent of VLSI's work force will have been eliminated through job cuts and attrition since the beginning of the year.