Broadcom warns of lower first-quarter revenue

NEW YORK Tue Jan 29, 2013 5:52pm EST

NEW YORK (Reuters) - Chip maker Broadcom Corp (BRCM.O) warned on Tuesday that first-quarter revenue would decline from the fourth quarter, sending the company's shares down almost 1 percent in late trade as investors worried about a slowdown in the smartphone market.

The maker of chips used in products ranging from television set-top boxes to smartphones such as Apple Inc's (AAPL.O) iPhone, forecast current quarter revenue of $1.824 billion to $1.976 billion, missing analysts' expectations for $2 billion.

Chief Executive Scott McGregor cited seasonal trends and macro-economic weakness for the revenue downturn and noted that wireless would be down slightly more than the company's broadband and infrastructure businesses.

"Everything will be down roughly about to same as the midpoint of our guidance. Mobile and wireless might be a touch lower than that," McGregor told analysts on the company's quarterly earnings call. But, he said, "the jury is still out until the Chinese New Year" as sales could pick up in the shopping season that comes in February.

Bernstein analyst Stacy Rasgon said investors would be concerned about signs of weakness in smartphones, which have been a reliable growth engine in technology in recent years.

"The guidance is light and they're seeing everything down. The open question is how much of the weakness is wireless," said Rasgon.

If wireless is a big part of the problem, investors will want to know if this relates to a broad slowdown or shifting market share among smartphone makers such as Apple and its biggest rival, Samsung Electronics Co Ltd (005930.KS), he said.

"If the smartphone market is slowing down more than people expect that would be a problem," the analyst said.

Last week, Apple's quarterly results and financial targets for the current quarter disappointed Wall Street, stoking fears that it is losing its dominance in smartphones.

Chip makers including Texas Instruments Inc (TXN.O) have also warned of broad weakness in demand but Rasgon noted that Broadcom typically does better than its competitors as it has a diverse business and has been buoyed by clients such as Apple.

"In general, people have higher expectations for growth at Broadcom. It's a little disappointing," Rasgon said.

Softening the blow, Broadcom also announced on Tuesday a dividend increase of about 10 percent.

Broadcom's fourth-quarter revenue rose to $2.08 billion from $1.82 billion, compared with Wall Street expectations for $2.07 billion, according to Thomson Reuters I/B/E/S.

It reported a profit of $251 million, or 43 cents per share, compared with $254 million, or 45 cents per share, in the year-before quarter.

Broadcom shares fell to $33.40 in late trade after closing at $33.71 in the regular Nasdaq session.

(Reporting By Sinead Carew; Editing by Peter Galloway)

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