UPDATE 2-PMC Sierra profit up, rev outlook in line

* Q3 EPS $0.12 vs $0.02 yr ago

* Rev falls 6 pct

* Sees Q4 rev $132 mln-$140 mln

(Adds conference call details, analyst comments, share movement)

By Manasi Phadke

BANGALORE, Oct 22 (Reuters) - PMC-Sierra Inc (PMCS.O), which makes chips used in broadband and storage applications, reported a more than five-fold jump in quarterly profit and forecast a fourth quarter largely in line with estimates.

The company expects fourth-quarter revenue of $132 million to $140 million, it said on a conference call with analysts. Analysts expect revenue of $135.7 million, according to Thomson Reuters I/B/E/S.

Shares of the company were down about 3 percent at $9.00 in trading after the bell. They closed at $9.24 Thursday on Nasdaq.

Last week, Intel (INTC.O) raised the bar for other chipmakers by posting a strong quarterly profit and giving a better-than-expected outlook.

PMC-Sierra forecast about an 11 percent growth in its adjusted earnings for 2009.

For the third quarter, the company earned $27.8 million, or 12 cents a share, compared with $4.5 million, or 2 cents a share, a year ago.

Excluding items, PMC-Sierra earned 15 cents a share, compared with analysts' estimate of 14 cents a share.

"I think the results were modestly light of expectations," Auriga USA analyst Anthony Carbone said, though earnings were slightly higher than Wall Street estimates.

Revenue dipped 6 percent to $130.9 million, while analysts were expecting $130.8 million.

"The company is doing a solid job of controlling costs," Carbone said. "To this point, they demonstrated higher earnings on in-line revenues."

Operating expenses fell nearly 10 percent to $65.6 million due to a reduction in research and development, and selling, general and administrative costs.

PMC-Sierra, whose customers include Hewlett-Packard Co (HPQ.N), ZTE Corp (0763.HK) and Cisco Systems Inc (CSCO.O), benefitted due to improved demand in its enterprise storage business and a growth in its microprocessor business.

"While the economic downturn has clearly impacted the company, its involvement in many new product designs has tempered the weakness in demand," Carbone said.

The company said it gained from the continued ramp of its new storage chip device at HP, its key customer.

The fourth quarter would be led by growth in enterprise storage, the company said.

"We believe we will increase our market share in this segment going forward," it added. (Editing by Saumyadeb Chakrabarty)