Broadcom Withdraws Annual Financial Guidance Over Coronavirus Uncertainty
March 12 2020 - 5:42PM
Dow Jones News
By Maria Armental
Chip maker Broadcom Inc. on Thursday pulled its financial
projections for the year, citing uncertainty around the coronavirus
pandemic.
Broadcom said it expected revenue this quarter to come in at
about $5.7 billion, short of analysts' projected $5.94 billion,
according to FactSet.
The company, based in California, had projected about $25
billion for the year that ends Nov. 1.
"The fundamental semiconductor backdrop has been improving, and
we did not see any material impact on our businesses due to
Covid-19 in our first quarter," said Chief Executive Hock Tan, who
referred to the disease caused by the coronavirus. "However,
visibility in our global markets is lacking and demand uncertainty
is intensifying."
Apple Inc., which last month warned that it would likely fall
short of quarterly revenue projections due to the coronavirus
outbreak, is Broadcom's largest customer, accounting for roughly
20% of Broadcom's revenue last year.
Broadcom shares closed down 11% for the day at $218.78, and fell
5% to $208.12 in after-hours trading.
First-quarter profit, before dividends on preferred stock, fell
to $385 million, or 74 cents a share, from $471 million, or $1.12 a
share a year earlier. On an adjusted basis, which excludes costs
tied to acquisitions and other items, profit fell to $5.25 a share
from $5.55 a share a year earlier.
Meanwhile, revenue from continuing operations rose to $5.86
billion from $5.79 billion a year earlier.
Analysts surveyed by FactSet expected a profit of $1.42 a share,
or $5.33 a share on an adjusted basis, and roughly $6 billion in
revenue.
Broadcom's semiconductor business, which accounts for the bulk
of revenue and has weighed on results in recent quarters, fell 4%
from the year earlier but was partially offset by a 19% revenue
growth in the infrastructure software segment.
Mr. Tan had said the core semiconductor business would return to
growth in the second half of the year, following the latest
cyclical downturn, and that Broadcom would also benefit from its
recent acquisition of Symantec's enterprise business.
Broadcom, whose roots in wireless run deep, is trying to move
away from the wireless hardware it sells to companies like
Apple.
In December, Mr. Tan, said company officials now considered
wireless as noncore and one of several businesses seen "as more
financial assets, especially in terms of capital allocation."
The company is trying to sell its radio-frequency, or RF, chips
business, which makes chips that amplify and filter wireless
signals in smartphones.
(END) Dow Jones Newswires
March 12, 2020 17:27 ET (21:27 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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