UPDATE 2-Lattice Semiconductor cuts 2nd-qtr outlook, shares fall

Thu Jun 14, 2012 10:13am EDT

* Sees Q2 rev flat to down 4 pct sequentially

* Cuts gross margin outlook to about 51 pct from 55 pct

* Shares down over 17 pct

June 14 (Reuters) - Shares of chipmaker Lattice Semiconductor fell 17 percent to a two-year low after the company cut its second-quarter revenue and margin outlook, prompted mainly by a shaky semiconductor market in Europe.

The company, which competes with Altera Corp and Xilinx Inc, now expects revenue to be flat to down 4 percent sequentially, implying sales of $71.7 million to $69.5 million in the quarter.

The maker of customized programmable chips and associated software had earlier expected second-quarter revenue to be flat to up 4 percent sequentially.

Analysts were expecting second-quarter revenue of $73.5 million, according to Thomson Reuters I/B/E/S.

The company had earlier cut its revenue outlook for the third and fourth quarters, primarily because of weakening demand in its communications business.

Last week, rival Altera affirmed its second-quarter forecast of a sequential revenue growth of 14 percent to 18 percent.

Lattice, whose chips are used in communications, computing, industrial, consumer and automotive industries, also lowered its forecast for second-quarter gross margin to about 51 percent from 55 percent.

Shares of the Hillsboro, Oregon-based company, which have lost a quarter of their value in the past three months, fell 78 cents to $3.71 in early morning trade on Thursday on the Nasdaq.