PMC-Sierra Gearing Up For Q3 Results

(RTTNews) - Soon-to-be acquired chipmaker PMC-Sierra Inc. (PMCS) is slated to release its third-quarter results on Monday, October 26, after the market close.

Third-quarter earnings are estimated to be $0.11 per share on revenue of $128.62 million, according to analysts polled by Thomson Reuters. This compares with a non-GAAP net income of $22.5 million or $0.11 per share on revenue of $135.5 million reported last year. GAAP net income was $5.5 million or $0.03 per share last year.

The company's third-quarter outlook calls for a sequential revenue growth of 1% - 9%, representing a range of $126 million - $136 million, driven by strength in storage with carrier flat to slightly down sequentially.

PMCS' storage division is projected to generate double-digit revenue growth, somewhat offset by legacy MIPS processors, and carrier revenue is expected to be flat with continued growth in OTN offset by softness in PON and wireless backhaul.

Also, the company forecasts third-quarter non-GAAP earnings in the range of $0.11 - $0.12 per share.

In the previous quarter, the company initiated steps to reduce spending across the organization by about 14%. This reorganization involves a reduction in force of about 200 employees worldwide and other reductions that are together expected to result in about $40 million per year in savings.

The company incurred a GAAP net loss of $8.6 million or $0.04 per share in the second quarter of 2015, wider than the prior year's loss of $3.5 million or $0.02 per share.

Non-GAAP net income totaled $18.0 million or $0.09 per share, compared to $18.3 million or $0.09 per share last year. On average, nine analysts polled by Thomson Reuters expected earnings of $0.11 for the quarter. Analysts' estimates typically exclude special items.

Net revenues dropped 1.6% to $124.8 million from $126.8 million generated a year ago, while analysts expected revenue of $133.23 million.

Most recently, PMC-Sierra said it received an unsolicited proposal from Microsemi Corp. (MSCC) to acquire all of the outstanding shares of PMC common stock in a cash and stock transaction. Under the proposal, PMC stockholders would receive $8.75 in cash and 0.0736 of a share of Microsemi common stock for each share of PMC common stock held at the close of the transaction. The Microsemi proposal was valued at $11.35 per share of PMC common stock.

PMC's board believes, after consultation with its financial advisors and outside legal counsel, that the Microsemi proposal would reasonably be expected to lead to a Superior Proposal. It has determined to engage in discussions with Microsemi. However, PMC's board noted that it is not modifying or withdrawing the recommendation with respect to the Skyworks merger agreement.

Currently, PMC-Sierra is in a definitive deal with Skyworks Solutions Inc. (SWKS), under which Skyworks will acquire PMC-Sierra for $10.50 per share in an all-cash transaction valued at about $2 billion in cash. The deal marks further consolidation in the semiconductor industry, as chipmakers struggle with rising costs and weak revenue growth.