TriQuint told Wall Street on Monday to expect sales of $80 million in the first quarter and earnings of only 14 cents a share.
First Call consensus was expecting TriQuint to earn 23 cents a share on sales of $94 million in the quarter. TriQuint makes chips for the wireless telecommunications and data communications industries.
On Tuesday, Merrill Lynch cut the stock from a near-term "buy" recommendation to a near-term "accumulate" rating "based on our belief of the possibility of further push-outs and cancellations resulting in additional estimate cuts and lack of any near-term catalyst."
Merrill Lynch cut its fiscal 2001 sales and earnings estimates to $315 million and 50 cents a share from $355 million and 85 cents a share, respectively. It also lowered its fiscal 2002 sales and earnings estimates to $370 million and 65 cents a share from $430 million and $1.02 cents a share, respectively.
Credit Suisse First Boston cut its estimate for 2001 to 49 cents a share from 94 cents a share.
"While the pre-announcement reflects the worse-than-expected demand and inventory environments, we believe that this is a net positive for the stock," Credit Suisse First Boston said in a research note. "While we continue to believe that the lack of near-term product cycle and worsening component inventory situation will threaten growth estimates for 2001, it is our opinion that this level of capitulation is healthy."
U.S. Bancorp Piper Jaffray downgraded the stock from a "strong buy" rating to a "buy" and slashed its 12-month price target from $55 a share to $25 a share.
Despite all the doom and gloom from analysts, TriQuint and other chip stocks enjoyed decent rallies.
Intel shares gained $1.75 at $32.13, while Advanced Micro Devices and PMC-Sierra moved up $1.92 and $2.75 a share, respectively. LSI Logic rose $1.76 at $18.58.
Last month, TriQuint easily topped analysts' estimates when it posted a profit of $23.2 million, or 27 cents a share, on sales of $90.3 million.
Following the fourth-quarter earnings report, Chief Executive Officer Steven Sharp reiterated the company's guidance calling for sales of $94 million in the first quarter and $411 million in the fiscal year.
TriQuint shares moved up to a 52-week high of $66.63 in June before slumping to a low of $16.81 in February.
Twelve of the 15 analysts following the stock rate it either a "buy" or "strong buy."