MOUNTAIN VIEW, Calif. -- TelCom Semiconductor Inc., which is in the process of being acquired by Microchip Technology Inc., here today warned that its fourth-quarter sales will be about 10% lower than the previous quarter. TelCom blamed the results on order delays and cancellations from its large customers in the wireless sector.
The supplier of analog, mixed-signal, and other chip products for the wireless market previously expected that its sales for the fourth quarter would be flat to slightly up, as compared to the third period. However, the company expects to have sequential growth in the first quarter of 2001.
"General demand has weakened and our larger customers have cancelled and pushed out deliveries," said Bob Gargus, president and chief executive of TelCom. "Lowering revenue expectations is clearly disappointing but we expect growth to resume during the first quarter. Despite the drop in the fourth quarter we are not revising our guidance or expectations for the calendar year 2001," he added.
The announcement represents the second financial warning issued by the company this year. In the third quarter, TelCom also said its sales would be lackluster, due to the slowdown in the wireless market (see Aug. 16 story).
In the third quarter ended Sept. 30, it posted sales of $18.2 million, a 22% jump over last year. It also reported a profit of $4.1 million, or $0.20 a share, compared to $2.3 million, or $0.14 per share, a year ago.
In the fourth quarter of last year, TelCom posted sales of $15.8 million, a 31% jump over the 1998 figure. It showed a profit of $4.1 million, compared to a loss of $300,000 in the like period in 1998.
Despite the news, TelCom will move ahead with its proposed plan to be acquired by Microchip for $300 million (see Oct. 27 story).
"We support TelCom's efforts in helping their key customers manage their inventory," said Steve Sanghi, Microchip's president and chief executive. "We support TelCom's efforts in helping their key customers manage their inventory," he added.