Broadcom Gives More Upbeat View For 4Q; Shares Up

Date : 12/14/2011 @ 9:02AM
Source : Dow Jones News
Stock : Broadcom Corp. (BRCM)
Quote : 54.67  0.0 (0.00%) @ 2:05AM

Broadcom Gives More Upbeat View For 4Q; Shares Up

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Broadcom Corp. (BRCM) provided a more upbeat view for the fourth quarter as the chip maker cited solid shipments and tight operational management.

The company, which gave the update at its analyst day in New York on Wednesday, now expects revenue at the high end of its October projection of $1.7 billion to $1.8 billion, a view that was below analysts' expectations at the time.

Shares were up 6.4% at $30 in recent premarket trading. The stock through Tuesday's close is down 35% this year.

The Irvine, Calif., company--which provides chips for set-top boxes, and wireless and connectivity processors used in Apple Inc. (AAPL) products--in October had warned demand across its business segments would be hurt amid economic uncertainty and a broader industry slowdown.

Broadcom on Wednesday also provided a more upbeat view for its product gross margins and overhead costs. The company now expects margins will be roughly flat with the third quarter, compared with its earlier estimate for margins to be down slightly to flat.

The company also expects that overhead costs, which include research and development expenses, will decline by $5 million from the third quarter, compared with the earlier expectation that they would be unchanged.

Companies across the chip sector have lowered their outlooks in recent days after the worst flooding in decades in Thailand dismantled or damaged a large chunk of the world's hard-drive manufacturing operations, causing a slowdown in PC production and the need for fewer chips by computer makers.

Though Chief Executive Scott McGregor said in October that the severe flooding in Thailand is significant for the hard-disk drive industry and could hurt PCs, data center products and personal video recorders that use hard-disk drives, he added Broadcom likely wouldn't be affected as much as other companies.

Broadcom in October reported that third-quarter earnings fell 21% as a series of one-time charges masked a better-than-expected core profit driven by broad-based revenue growth.

--By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com



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