Telecommunications chipmaker NetLogic Microsystems Inc's quarterly sales missed estimates and fell 2 percent over the last quarter as Chinese carriers tightened spending, and the company's shares slipped 5 percent after the bell.
Total capital spending on 3G data network in China is likely to fall 24 percent this year from $18 billion last year, according to a UBS report.
The company, which gets 42 percent of its revenue from China, however, said it expects revenue from its largest market to grow in the second quarter.
Despite the projected drop in spending in China, telecoms equipment makers Huawei Technologies, which is one of Netlogic's key customer, and ZTE Corp have said they expect to gain from the global boom in sales of smartphones and tablets.
NetLogic said it expects second-quarter earnings of 37 cents a share and revenue to be up 5 percent sequentially, helped by the launch of new products.
Analysts were expecting earnings of 37 cents a share, excluding items, on revenue of $103.37 million, according to Thomson Reuters I/B/E/S.
NetLogic's recent acquisition of fabless semiconductor provider Optichron Inc is expected to contribute to initial product revenue during the second-quarter.
The Santa Clara, California-based company's first-quarter earnings came in at $6 million, or 8 cents a share, for the first quarter, compared with a loss of $57.3 million, or 99 cents a share, a year ago.
Excluding items, the company earned 39 cents a share.
The company, which also sells to Cisco and Alcatel-Lucent, said revenue rose 14.4 percent to $98.7 million.
Analysts were looking at earnings of 36 cents a share on revenue of $100.5 million.
The company also expects Hewlett Packard, Ericsson and ZTE to become major customers in the later half of the year as they increase spending on 3G and 4G-LTE technologies.
Shares of the company, which gained a quarter of its value in the last three months, were trading down $2.18 at $41.10 in after-market trade on Nasdaq. The stock closed at $43.28 on Monday.
(Reporting by Rachana Khanzode and Supantha Mukherjee in Bangalore; Editing by Saumyadeb Chakrabarty)