Cypress Up Despite Gloomy Outlook

Cypress Semiconductor (NYSE: CY) advanced 83 U.S. cents to $16.23 in morning trading Tuesday, even afterlowering its first-quarter outlook for the second time. The shares overcamea drop in pre-market trading to open higher.

The San Jose, California-based semiconductor maker said sales for thequarter ended April 1st were $262 million, below its previous estimate of $280 million. Earnings before goodwill likely totaled 23 to 26 cents per share,below the company’s previous forecast of 30 to 34 cents.

Changes in the way the company accounts for business cut revenue by $25million during the quarter, Cypress said.

“The first quarter ended worse than we expected,” said chief executiveofficer T.J. Rodgers. “We barely turned positive on bookings, withcancellations offsetting virtually every order we received.

“It is not clear if our customers reduced the inventory positions they weretrying to manage, considering that end demand has really slowed down,” saidRodgers. “We still don’t have the visibility, but judging from what we’veseen in Q1, we are estimating that the second quarter will be another downquarter.”

Second-quarter revenue is likely to fall in the $200 million to $210 millionrange, with “single-digit” earnings before goodwill, Rodgers said.

Cypress plans to report first-quarter results on April 19th.

In March, Cypress lowered its targets for the quarter because of changes toits business model and declines in orders and selling prices. The companysaid it was cutting capital spending and deferring merit-based salaryincreases, but would continue to hire technical staff to maintain its paceof developing new products.

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