Broadcom Drops as Sales Forecast Misses Analysts’ Estimates
April 27, 2011, 4:35 PM EDTBy Olga Kharif
(Updates share price in second paragraph.)
April 27 (Bloomberg) -- Broadcom Corp., the biggest maker of chips for television set-top boxes, declined after the company forecast second-quarter revenue that missed analysts’ estimates, citing a slowdown in sales to mobile-phone makers.
The shares dropped $4.96, or 12 percent, to $35.45 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock had fallen 7.2 percent this year before today.
Broadcom’s wireless and consumer-electronics customers are facing steeper competition, with Nokia Oyj and Samsung Electronics Co. each reporting lower profit in the recent quarter. Some of Broadcom’s TV-systems clients were also affected by the March 11 earthquake and tsunami in Japan, said Doug Freedman, an analyst at Gleacher & Co.
“This company has had a lot of issues crop up,” said Freedman, who rates Broadcom shares “buy.” “Some of their smartphone customers -- Samsung and Nokia -- didn’t have great quarters.”
Revenue in the current period will be $1.75 billion to $1.85 billion, Irvine, California-based Broadcom said yesterday in a statement. That compared with the average analyst estimate of $1.89 billion, according to a Bloomberg survey. A year earlier, sales were $1.6 billion.
Sales in the first quarter rose 24 percent to $1.82 billion, compared with analysts’ average estimate of $1.81 billion. Net income increased to $228 million, or 40 cents a share, from $210 million, or 40 cents, a year earlier, Broadcom said.
The company’s gross margin -- the percentage of sales left after subtracting production costs -- was 51 percent in the first quarter, in line with analysts’ estimates.
“The quarter was fine, but the guidance was light,” Stacy A. Rasgon, an analyst at Sanford C. Bernstein & Co. who has a “market perform” rating on the stock, said in an interview yesterday. “This is a stock investors are buying because they want revenue growth. I don’t know if this is a one-quarter blip or a longer-term story.”
--Editors: Jillian Ward, Nick Turner
To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
