Xilinx (NASDAQ: XLNX), a tech entity involved in programmable logic and a colleague of companies like Actel (NASDAQ: ACTL) and Altera (NASDAQ: ALTR), issued a business update on Tuesday. Believe it or not, it contained some good news. How about that for a change? I'm sure shareholders were pleased.
According to this news item, Xilinx believes that its revenue picture should be better than previously thought. Sales should drop by somewhere between 13% and 18% for the March quarter on a sequential basis. Management had originally believed that they'd have to report a sequential revenue drop between 15% and 25%. So, yes, there will still be a decline, but hey, if it's less than expected, you gotta take that. It's too bad, though, that the gross margin range wasn't raised. It should still fall between 61% and 63%. If management had raised that as well, then I bet the stock would have closed even higher on the news. It rose almost 4% on better-than-average volume yesterday.
Shares of Xilinx have held up relatively well as of late. Please stress the word relatively. It certainly isn't a powerhouse equity, but as of late Thursday, the stock is up over 1% over the one-month frame and up over 3% over the three-month frame. Many shareholders who hold tanking stocks might look upon such performance with envy. However, I think the tech sector most likely is headed lower.
Of course, that statement might be based in bias. I recently bought some Microsoft (NASDAQ: MSFT) and that hasn't worked out too well (my overall cost basis so far is over the present price). But when I see a big chip company like Intel (NASDAQ: INTC) at a 52-week low, and when I consider the market chaos in general, I can't say that I'd be interested in buying Xilinx on this admittedly positive update. No, I could easily see Xilinx sinking back to its 52-week low, and beyond. So, sure, I'll celebrate the narrowed range. I won't, however, celebrate by joining the buyers.
Disclosure: I own Microsoft; positions can change without notice.
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