* Q1 EPS $0.02 vs $0.07 yr ago
* Q1 adj EPS $0.05
* Revenue falls 6 pct
* Expects Q2 revenue of $52-$56 mln (Adds Q2 outlook, details, shares)
July 27 (Reuters) - Chipmaker Zarlink Semiconductor Corp reported a 77 percent drop in first-quarter net profit and said it sees demand slowing for its communications products, as it fends off an unwanted buyout attempt.
“We are adopting a conservative near-term view on the second quarter,” said Chief Executive Gary Tanner.
“Many customers in the communications market are proceeding cautiously though the current global economic environment and managing inventory built-up following the Japanese earthquake.”
Zarlink’s main communications products, including line circuits and network timing and synchronization products, are used by telecom and cable companies to deliver bundled voice, video, data and mobile services.
A smaller share of its sales are in medical, where it provides ultra low-power radios for implanted medical devices such as pacemakers.
Ottawa-based Zarlink gets roughly 80 percent of its revenue from the communications sector and about 13 percent from the medical sector.
Microsemi Corp , a power management chipmaker, made a third offer this year to buy Zarlink for $3.35 a share, or $548.7 million, a bid Zarlink dismissed last week as inadequate.
On Monday, Zarlink adopted a “poison pill” shareholder rights plan to fend off Microsemi’s hostile offer.
Zarlink, whose customers include Alcatel-Lucent , Nokia Siemens Networks and Cisco , expects second-quarter revenue of $52-$56 million.
It expects to record costs of $1.5-$2.5 million, or 1 cent to 2 cents per share in the second quarter, as it completes workforce redeployment activities.
The company earned a net profit of $2.4 million, or 2 cents a share, compared with $10.3 million, or 7 cents a share, a year ago.
Excluding items, it earned 5 cents a share.
Revenue fell 6 percent to $55.4 million.
Analysts, on average, had expected Zarlink to earn 3 cents a share, on revenue of $55.3 million, according to Thomson Reuters I/B/E/S.
Zarlink shares surged on the buyout bid and remain buoyant, having gained more than 60 percent in the last week, to close at C$3.61 on Tuesday on the Toronto Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore and Alastair Sharp in Toronto; Editing by Joyjeet Das)