Merrill Lowers Outlook for Xilinx

But analyst Christopher Danely believes the inventory correction should improve over the next six months

Xilinx (XLNX ) lowered Q1 guidance. Merrill Lynch cut its estimates on the maker of logic devices.

Analyst Christopher Danely says the company expects gross margins to approximate 52% in Q1, below the 58% forecast, due to lower than expected sales and a product mix shift. He believes June represents 30%-40% of total Xilinx business for its Q1. Danely cut his $0.58 fiscal 2002 (Mar.) EPS estimate to $0.30 and his $0.80 fiscal 2003 forecast to $0.56. He cut his $1.2B fiscal 2002 revenue estimate to $1.07B and his $1.43B fiscal 2003 projection to $1.24B. However, he is encouraged by the fact that most downward revisions are behind Xilinx, and believes year-over-year growth should bottom in the September or December quarters. The analyst reiterates his near term accumulate rating, and has a $50 price target on the shares as he believes the inventory correction should improve over the next six months.

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