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Hot on the heels of my switch to non-bearishness toward semiconductor stocks, Xilinx, Inc. (NASDAQ:XLNX) released its business update for the June quarter of fiscal 2008.

– June quarter sales are expected to be at the low end of the prior guidance range, which called for sales to be up 1% to 5% sequentially.

– Gross margin is expected to be 62% to 63%, up from prior guidance of approximately 62%.

– Operating expenses are expected to decrease approximately 5% sequentially, an improvement from prior guidance calling for a decrease of 4% to 5% sequentially.

I was impressed when Xilinx originally issued their guidance, and now I know why it looked so good - it was wrong. The slower sales fits in with overall industry trends. The higher gross margin fits in with my look at inventory trends. All in all, I am not surprised and not at all shaken from my not-bearish stance.

Disclosure: author has a short position in SMH put options at time of publication.

XLNX 1-yr chart:

XLNX 1-yr chart

Source: Xilinx Takes Back Its Solid Guidance