NEW YORK Dec 5 Broadcom Corp is likely
to raise its revenue target for the fourth quarter on
better-than-expected sales of chips used in mobile devices,
according to analysts.
Strong consumer demand for Apple Inc's iPhone 5 and
Samsung Electronics Co's latest Galaxy phones, which
use Broadcom chips, is behind the announcement expected at the
company's annual investor meeting on Thursday, analysts said in
research notes and interviews.
While iPhone 5 sales were initially stunted by a supply
shortage, Citi analyst Glen Yeung said in a Nov. 28 research
note that "dramatically" improved availability is helping
On Oct. 23 Broadcom had forecast fourth-quarter revenue of
$1.95 billion to $2.1 billion, implying a midpoint of $2.025
Wall Street sees the company beating the mid-point, with a
consensus estimate of $2.04 billion, according to Thomson
But Citi's Yeung expects quarterly revenue of about $2.096
billion, up from his earlier estimate of $2.025 billion.
While this would still be within the original guidance
range, an increase to the high end of its range would be good
news in a chip market where most of the latest targets have been
Investors have been disappointed by weak guidance from
bigger chip companies Intel Corp and Texas Instruments
Inc. Another chip maker, Altera Corp, trimmed its fourth
quarter revenue guidance on Tuesday.
Broadcom said in October that its forecast reflected
challenging marketing conditions, including weakness in areas
such as computer data center infrastructure and communications
But, now, Canaccord Genuity analyst Bobby Burleson said he
believes the company is having to boost its chip production
levels due to stronger than expected demand.
"Specifically, we believe BRCM has increased orders to
suppliers by over 5 percent for the remainder of Q4 and through
Q1 versus our prior month's checks," Burleson said.
"I think consumer devices sold well after Thanksgiving," the
analyst said, citing Samsung and Apple devices in particular.
Williams Financial analyst Cody Acree also cited
improvements in infrastructure as well as phones.
"Leverage into the handset space and some of the
infrastructure markets that are going better means they'll
likely up their range a little bit," Acree said, adding that
Broadcom may not come out with an "overly aggressive" increase
because of economic uncertainties.
FBR Capital Markets analyst Craig Berger was more cautious
in his expectations for the analyst day, but noted that Broadcom
shares would likely rise if the company provides stronger
guidance on Thursday as the shares have not been trading up much
ahead of the meeting.
"We believe BRCM shares are setting up favorably ahead of
its analyst day as expectations remain largely muted," he said.
"While we do not think the firm will raise revenue guidance,
it could give favorable margin or operating expense spending
commentary, or favorable product commentary," Berger added.
Broadcom shares fell 14 cents, or 0.5 percent, to $32.29 on
Nasdaq late Wednesday afternoon. The stock has fallen from
$33.36 just ahead of its Oct. 23 earnings report, when it first
issued its current quarter guidance.