By Noel Randewich
July 23 Broadcom Corp forecast
third-quarter revenue below expectations, underscoring concerns
on Wall Street that smartphone growth might be waning, and
sending the chipmaker's shares lower.
Investors have become increasingly concerned in the past
month that the explosive growth of smartphones of recent years
might be coming to an end.
Such a slowdown would hurt not only handset makers such as
Samsung Electronics and Apple, but their component suppliers as
well, such as Broadcom and Qualcomm Inc, which posts
its quarterly results on Wednesday.
Key customer Apple Inc reported on Tuesday that it
shipped more iPhone than expected for the June quarter, although
gross margins were down.
"The high-end mobile market is on crutches," said Evercore
analyst Patrick Wang. "We're definitely seeing signs of
saturation at the high end. Broadcom has given us a potential
sneak peak of what we might see from Qualcomm tomorrow."
Broadcom's chips integrating wifi and Bluetooth technology
are used in Apple's iPhone and other top-tier smartphones and
The company makes 3G baseband chips used in less expensive
smartphones sold in Asia and other emerging markets, and it
plans to launch high-speed 4G baseband chips compatible with
more advanced networks.
Like its competitors, Broadcom is trying to diversify its
customer base with more sales to manufacturers, including
Samsung Electronics Co Ltd, Apple's main rival in
smartphones and tablets. But investors have also become less
optimistic about the sales of Samsung's top-tier Galaxy S4
Broadcom posted second-quarter revenue of $2.09 billion and
net loss of $251 million, or 43 cents a share.
The chipmaker said third-quarter revenue would be between
$2.05 billion and $2.20 billion.
Analysts, on average, expected second-quarter revenue of
$2.104 billion and $2.245 billion for the third quarter, which
ends in September, according to Thomson Reuters I/B/E/S.
Broadcom shares were down nearly 4 percent at $30.65 in
extended trading after closing down 4.27 percent at $31.83.