Dec 10, 2020
Broadcom warns of soft enterprise demand, shares slip
, Bloomberg News
Broadcom Inc., a chipmaker that supplies Apple Inc. and other large electronics makers, warned about soft demand from corporate customers. The shares slipped more than 2 per cent in extended trading.
“We concluded the year with strong fourth quarter results driven by continued demand for networking from cloud and for broadband from service providers as well as the significant ramp in wireless, even as enterprise demand remained soft,” Chief Executive Officer Hock Tan said in a statement.
Revenue in the three months ending January will be about US$6.6 billion. That compares with an average analyst estimate of US$6.5 billion, according to data compiled by Bloomberg.
The company also reshuffled its leadership. Tom Krause, the chief financial officer, is becoming head of a new Infrastructure Software Group. He’s being replaced by Kirsten Spears, who’s currently the corporate controller. Broadcom’s head of sales, Charlie Kawwas, is being promoted to chief operating officer.
Broadcom is a major provider of semiconductors that filter radio signals and provide Wi-Fi connections in smartphones, including the iPhone. Its projections give investors clues on future demand from companies such as Apple and Samsung Electronics Co. It also dominates the market for switches, machines that direct traffic between server computers in data centers. That position provides a window into the spending plans of the largest cloud-computing providers, including Amazon.com Inc., Microsoft Corp. and Alphabet Inc.’s Google.
Broadcom stock declined 2.5 per cent in extended trading. The shares earlier closed at US$410.04 earlier in New York leaving them up 30 per cent this year.
In recent years, the company has branched out into mainframe computer software and cybersecurity, the result of an acquisition spree that has given its products a role in everything from data center networking gear to smartphones.
Net revenue in the fiscal fourth quarter rose 12 per cent to US$6.47 billion, the company said. Before certain items, profit was US$6.35 a share. Analysts had estimated a profit of US$6.25 a share on revenue of US$6.43 billion.
