I'm always skeptical of company statements. All too often, the message either proves overly optimistic or seems geared toward reducing expectations to ridiculously low levels. In the case of Standard Microsystems (NASDAQ:SMSC), though, I completely believe management when it says it expects that the current quarter could be uglier than the third quarter -- which was pretty ugly to begin with.

Last quarter, revenues were down 19.5% from year-ago levels. Profits were actually up, but only because of a tax credit and favorable exchange rates. On a non-GAAP basis, income was down 32%.

The reason for the soft patch? Though Standard Microsystems' third quarter, which ended Nov. 30, is usually its best quarter, half of its revenue comes from PC and automotive markets -- two industries that haven't exactly been on fire themselves. In other words, weak demand caused problems.

The company's woes shouldn't come as a complete shock. We've heard the same from other names in the personal technology space recently. Micron (NYSE:MU) recently complained of too much inventory and not enough demand. On Wednesday, Intel (NASDAQ:INTC) cited weak demand for its 23% drop in revenue in its fourth quarter. And the shares of Intel rival Advanced Micro Devices (NYSE:AMD) lost 71% last year -- largely for the same reasons.

Take the hint
If Standard Microsystems were the only company singing this tune, I might not buy into its pessimism. But when the entire microchip chorus is singing in unison, I'm not going to argue.

In any case, the news for Standard Microsystems' fourth quarter is pretty grim. Management expects sales to fall roughly 50% from last year's fourth quarter, adding that it expects to see a non-GAAP loss of $0.40 to $0.55.

I still have to give some props to the company, though. Standard Microsystems has no debt, and it's not in denial about its current situation. The trailing P/E of 10.8 is certainly respectable, too.

Unfortunately for investors, a good debt situation and reasonable valuations won't make up for missing earnings growth. It could be a couple more quarters before Standard Microsystems is able to get back on its feet.

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