Wireless chipmaker Atheros Communications Inc reported a quarterly profit that topped Wall Street targets by a penny, even as demand for its chips for PCs and networking equipment drove up revenue by 21 percent.

Shares of the company fell about 9 percent in trading after the bell, after the company forecast sequentially lower gross margins for the third quarter in a conference call.

The company said it expects third-quarter gross margins of about 48.5 percent to 49.5 percent. For the second quarter also, the company reported a sequential drop in margins to 50.8 percent.

"There have been very high expectations from the stock. It has been a big outperformer going into earnings. However, the gross margin guidance has been lower than what people had been expecting," Jefferies & Co. analyst Adam Benjamin said by phone.

Shares of the company have gained about 16 percent in the last three months.

The company posted second-quarter earnings of $10.1 million, or 16 cents a share, compared with earnings of $9.3 million, or 16 cents a share, in the year-ago quarter. Revenue rose to $121.5 million.

Excluding items, Atheros earned 31 cents a share for the latest second quarter. 

Analysts were expecting the company to earn 30 cents a share, on revenue of $120.9 million, according to Reuters Estimates.

Earnings were crimped by higher operating expenses, which rose by 29 percent during the quarter.

For the third quarter, the company expects to earn 35 cents to 36 cents a share.

In a conference call with analysts, Chief Financial Officer Jack Lazar said the company expects revenue to grow 13 percent to 15 percent sequentially.

For the third quarter, analysts on average were expecting earnings of 35 cents a share, before items, on revenue of $134.0 million.

Shares of Atheros were down more than $2 in trading after the bell. They had closed at $30.68 Monday on Nasdaq.

Source:Reuters