The chips haven't been officially announced yet, but CEO Bob Bailey noted them during yesterday's earnings call with analysts. Asked about the DSL world, Bailey pointed out China's deployment of IP DSLAMs and said PMC is angling for a piece of that market.
"PMC has IP/ATM hybrid chips that are going into the next generation" of IP DSLAMs, he said. "We haven't announced it, but all these major DSLAM guys are evaluating it in detail," Bailey said.
PMC offers a bevy of ATM chips -- not to mention microprocessors and switch chips -- for traditional DSLAMs. The IP DSLAM would be new territory for the company, but wouldn't be a revenue generator this year.
"It's more of a 2006 kind of a program," Bailey said, noting that IP DSLAM deployment is just getting started. "China seems to be moving in this direction first, although it's a pretty slow process. There's a lot of equipment being looked at and deployed sparingly."
Details of the chips aren't available, but it seems likely they would be protocol-conversion chips, interworking between ATM-based DSL lines and an IP network core. Infineon Technologies AG (NYSE/Frankfurt: IFX) produced such chips earlier this year (see Infineon Touts Convergence Processor).
Analysts agree IP is in DSLAMs' future. Infonetics Research Inc. estimates that revenues from ATM-based DSLAMs will begin to decline next year, with IP DSLAMs representing one-third of all DSLAM ports shipping in 2006 (see UTStarcom Ranked #2 in DSLAMs).
For its second quarter ended June 27, PMC reported net income of $15.4 million, or 8 cents per share, on revenues of $85.7 million, compared with net income of $16.8 million, or 9 cents per share, on revenues of $78.7 million the previous quarter.
The results beat analysts' expectations by a penny. But the company's stock fell in after-hours trading, down 65 cents to $11.10 at one point, and shares dropped even further today, reaching $10.48 by midday.
Investors might have been spooked by the possibility of a flat third quarter, as CEO Bailey predicted revenues between $86 million and $92 million. "We were hoping for more, given the environment for DSL and wireless access," writes analyst Allan Mishan of CIBC World Markets in a report issued today.
Moreover, Cypress Semiconductor Corp. (NYSE: CY) had set an optimistic tone with its earnings call, which sent PMC's stock up 63 cents yesterday.
Some analysts pointed out that summer is a traditionally slow time for semiconductors and that PMC's prospects still look good. "We view the conservative guidance into Q3 as just that, a conservative expectation for what is traditionally a seasonally soft quarter," writes Jeremy Bunting, an analyst with Thomas Weisel Partners.
— Craig Matsumoto, Senior Editor, Light Reading
For more on this topic, check out:
- The Light Reading Insider report:
— DSLAM Dynamics
- The Heavy Reading report:
— Next-Generation DSL Equipment: The Path to Profitability
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