Bloomberg News

Broadcom’s Sales Forecast Falls Short of Analysts’ Estimates

October 25, 2011

(Updates with CEO comment in fourth paragraph.)

Oct. 25 (Bloomberg) -- Broadcom Corp., the largest maker of chips that power television set-top boxes, gave a fourth-quarter sales forecast that fell short of analysts’ estimates, citing weakness in demand across the semiconductor industry.

Revenue in the current period will be $1.7 billion to $1.8 billion, the Irvine, California-based company said in a statement today. Analysts on average had estimated sales of $2.01 billion, according to data compiled by Bloomberg.

Broadcom said it’s being hurt by lackluster demand from phone-service providers for new equipment, the potential for fewer shipments of set-top boxes and personal computers due to a shortage of hard disks, and the company’s closure of a unit that made chips for digital TVs and Blu-ray players. Some of Broadcom’s customers are paring orders on concern that a slow economy will crimp demand for their products and services.

“We’re seeing macro impact across all of our segments,” Chief Executive Officer Scott McGregor said on a conference call with analysts today. “Europe and the United States are driving more of the weakness overall.”

Broadcom expects flooding in Thailand to halve the expected 200 million total shipments of hard-disk drives in the fourth quarter, McGregor said. That may cut into shipments of PCs and digital-video recorders, he said.

Broadcom slipped to $33.74 in extended trading after the report. The stock fell 4.3 percent to $35.80 at the close in New York. The shares have declined 18 percent this year.

Third Quarter

Third-quarter net income fell 18 percent to $270 million, or 48 cents a share, from $328 million, or 60 cents, a year earlier, the company said. Sales in the third quarter rose 8.4 percent to $1.96 billion. Analysts projected Broadcom would have net income of 52 cents on sales of $1.95 billion, the average estimates in a Bloomberg survey.

Product gross margin, or the percentage of sales remaining after deducting manufacturing costs, will be “flat to slightly down” from the third quarter’s 49.5 percent, the company said.

--Editors: Jillian Ward, John Lear

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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