) Applied Micro Circuits (AMCC
), PMC Sierra (PMCS
), Vitesse Semiconductor (VTSS
), Xilinx (XLNX
) to market perform from long-term buy.
Analyst Eric Chen recommends investors trim positions on the belief that the downside risk could be as much as 30% from current levels, based on a fair value estimate. He says sector fundamentals could further deteriorate as revenues decrease sequentially by 10%-15% in Q4 and 5%-10% in Q1 if 2002.
Chen thinks the earliest time one can anticipate some stabilization in the inventory situation is Q2 2002, assuming the current expectations of end demand for telecom equipment is realistic. Channel checks indicate that order flow remains weak for CommIc companies and visibility still is poor.