UPDATE 2-Xilinx foresees weak Q2 margins, shares slide

Thu Jul 16, 2009 1:28am BST

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* Xilinx Q1 EPS ex items 21 cts vs 19 cts Street view

* Sees revenue up 2-6 pct in fiscal Q2 from Q1

* Shares down 5.3 percent (Adds analyst and executive's comments, byline)

SAN FRANCISCO, July 15 (Reuters) - Specialized chip maker Xilinx Inc (XLNX.O: Quote, Profile, Research) offered a disappointing quarterly margin forecast on Wednesday, dragging its shares down more than 5 percent despite slightly beating quarterly earnings expectations.

Analysts were concerned about the company's inability to quickly unravel supply constraints that had been delaying product delivery for over a quarter, while noting a lack of control on expenses.

The market had also expected better numbers overall in light of Intel Corp's stellar earnings on Tuesday. [ID:nLF27037]

"They are stumbling," said Mahesh Sanganeria of RBC Capital Markets. "Gross margins don't look that great and operating expenses seem high."

Xilinx's direct competitor, Altera (ALTR.O: Quote, Profile, Research), released a better-than expected quarterly projection on Tuesday, sending its stock up 3 percent in extended trading. [ID:nN14305927] Continued...