UPDATE 2-PMC Sierra sees strong first-quarter revenue; shares up

* Q4 adj EPS of 17 cents beat estimates by 2 cents

* Q4 revenue up 15 pct, tops Street view

* Q1 sales forecast beats estimates

* Shares up 8 pct after the bell

BANGALORE Jan 28 (Reuters) - PMC-Sierra Inc (PMCS.O) forecast first-quarter revenue above estimates, driven by demand for its chips used in storage devices and microprocessors, sending its shares up as much as 8 percent in extended trade.

The company said it recorded strong bookings in the fourth quarter and early in the first quarter of 2010.

PMC-Sierra forecast first-quarter revenue of $148 million to $152 million, beating analysts' expectations of $132.9 million, according to Thomson Reuters I/B/E/S.

"We anticipate this growth will be largely driven by wide area networking infrastructure, which is experiencing a strong recovery on both wireline and wireless side of the business," a company executive said on a conference call with analysts.

PMC-Sierra also expects the enterprise storage business to be flattish in first quarter -- typically a seasonal down period for the storage business. Enterprise storage is the company's biggest business segment.

Most chipmakers are seeing improved demand after a two-year long slump brought on by increased competition, declining prices and a supply glut.

PMC-Sierra, which has been witnessing strong demand from its key customer Hewlett-Packard (HPQ.N), is expecting about $75 million per year in revenue from HP in 2010.

"The strong guidance is mainly driven by some real strength in enterprise storage it will be benefiting from the trends there," FBN Securities analyst Michael Burton said.

"The company has been pretty successful in gaining some traction with HP and as well as with some of the other customers in some of its newer products."

STRONG FOURTH QUARTER

The company also said reported better-than-expected fourth-quarter results. Net income increased to $15.1 million, or 6 cents per share, from $8.8 million, or 4 cents per share, a year earlier.

Excluding items, the company posted earnings of 17 cents a share. Revenue rose 15 percent to $139.5 million.

Analysts expected earnings of 15 cents a share, excluding exceptional items, on revenue of $136.9 million, according to Thomson Reuters I/B/E/S.

PMC-Sierra competes with companies like Applied Micro Circuits (AMCC.O), Broadcom (BRCM.O), Emulex Corp (ELX.N), Intel (INTC.O), Marvell (MRVL.O), Maxim Integrated (MXIM.O) and Texas Instrument TXN.N.

Shares of the Santa Clara, California-based company, which have gained about 70 percent of their value in last one year, were up 8 percent at $8.40 in trading after the bell. (Reporting by Shrutika Verma in Bangalore; Editing by Saumyadeb Chakrabarty)