Shares of Xilinx (XLNX) are down 5 cents at $31.16 after the company this morning cut its outlook for this quarter, citing “a decline in large customer business in the Communications end market.”
Xilinx now expects sales to drop 9% to 12% this quarter from last quarter’s level, versus a prior view for sales to be down 3% to 8%. However, the company also said its gross profit margin will be higher than previously expected at 65% versus 64% previously.
In a note to clients, Piper Jaffray chip analyst Gus Richard observes communications gear accounts for upwards of 45% to 50% of Xilinx’s chip sales.
“We believe this is Cisco Systems (CSCO) and European wireless infrastructure suppliers,” writes Richard.
We understand that European customers have been de stocking. There may also be some weakness from Chinese communication suppliers, but we do not believe that XLNX has as high an exposure as ALTR to the Chinese customers. We do see some evidence that the wireless demand will improve in the March quarter.
Morgan Stanley’s Ehud Gelblum wrote this morning that communications equipment makers are suffering from a slowdown in carrier capital spending.
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