UPDATE 1-Exar cuts outlook on inventory worries, shares fall
* Sees Q2 rev $36-$36.5 mln
* Sees Q2 adj operating expenses $20mln-$21mln
* Shares down 7 pct pre-market
Sept 21 (Reuters) - Chipmaker Exar Corp (EXAR.O) cut its second-quarter revenue outlook as its customers reduced inventory due to dropping demand, sending its shares down 7 percent.
Exar's revised projections follow weak outlook from larger chip companies National Semiconductor (NSM.N) and Texas Instruments Inc TXN.N earlier this month, hurt by sluggish economic growth.
The company, whose chips are used mainly by the telecom and networking equipment industry, now expects second-quarter revenue of $36-$36.5 million compared with its previous projection of $40-$42 million.
Analysts were expecting revenue of $41.17 million, according to Thomson Reuters I/B/E/S.
Exar, which counts France's telecom equipment firm Alcatel Lucent (ALUA.PA) as its biggest customer, also lowered its non-GAAP gross margin expectation for the second quarter to 50-51 percent, down from 52.5-54.5 percent.
Operating expenses would be slightly lower during the period, it said in a statement.
The company competes with Applied Micro Circuits (AMCC.O), Integrated Device Technology (IDTI.O) and Texas Instruments.
Exar, which has not posted a profit since June 2007, is scheduled to report its second-quarter results in October.
Shares of the company were down 7 percent in pre-market trade Tuesday on Nasdaq. They closed at $5.85 on Monday, off 18 percent since reporting first-quarter results in late July. (Reporting by Siddharth Cavale in Bangalore; Editing by Don Sebastian)
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