AVGO Broadcom Inc

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)

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