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Microsemi Slumps after Analyst Cuts Estimates

Shares of Irvine-based chipmaker Microsemi Corp. slumped Tuesday after an analyst downgraded the stock on concerns about weak demand in the aerospace industry and a lawsuit Microsemi is facing.

Investors sent shares down about 4% at close of trading on a recent market value of roughly $960 million. That’s after Microsemi’s shares closed down about 5%.

Barclays Capital analyst Romit Shah lowered his rating on the stock to “equal weight” from “overweight” and slashed his price target to $10 per share, down from $12.

Microsemi was trading at around $12 per share on Tuesday.

He also cut his outlook for the balance of this year and next.

Shah expects Microsemi to post 2009 profits of $33 million, down from a previous outlook of $36 million.

Wall Street analysts, on average, are expecting the company too see yearly profits of $75 million.

Shah cited recent production cutbacks at Boeing Co., one of Microsemi’s biggest customers, as a reason for slimmer profits ahead, according to a report on financial news Web site Barrons.com.

“Recent weakness in the commercial aerospace communications market and a lawsuit by the Department of Justice could pressure estimates,” Shah said in a note to clients.

In mid-December, Microsemi got slapped with an antitrust lawsuit from the Department of Justice.

The suit claims the company’s $25 million buy of Costa Mesa-based Semicoa Semiconductors Inc. in July created a monopoly on certain types of chips.

Shah said “the suit could set a precedent for additional complaints or limit the company’s pricing power,” the report showed.

Microsemi is set to report first quarter results on April 23.

The company said in January it’s expecting profits of $12 million to $16 million on sales of $105 million to $110 million.

Analysts, on average, are looking for profits of $15 million on sales of $106 million.

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