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Friday, July 07, 2006

PMC-Sierra's $280 million CFO (PMCS)

PMC-Sierra, which makes networking semiconductors, made two announcements today. One was that it would hit the mid-point of its revenue forecast for the second quarter. The range was $108 to $112 million. The company expects another $8.5 to $9 million from its purchase of Passive. All in all, not bad news for a company that was trading very near the low end of its 52-week range.

The stock fell further today, about 15% to $7.50 on a 12-month high/low of $13.77/$6.20. The only other piece of news announced today was the departure of the company's CFO. The company lost $280 million of its market cap on the 15% drop.

Is that rational? Probably not.

PMC's revenue has risen each of the last four quarters. If the company does $110 million it will be up sharply from the $87.8 million the company had in the quarter ending April 2. It will also be well ahead of the $71.5 million that the company did in the comparable quarter a year ago which ending July 3, 2005.

As Churchill said of the Soviet Union, it is a "riddle wrapped in a mystery inside an enigma".

And so it is, for PMC-Sierra's $280 million CFO.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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