Broadcom ($36) shares fall on weak forecast (KLAC reporting tonight )
“We maintain our buy rating, but reduce our price target to $47 from $50 for Broadcom as the company’s guidance for the second quarter of 2011 was significantly below our consensus estimates due to surprising weakness in the mobility segment,” Auriga analyst Sandeep Shyamsukha wrote in a note.
Many analysts remained upbeat about Broadcom’s position in what is still viewed as an expanding mobile market, highlighted by the growth of smartphones and tablets.
“Guidance is weak but story is solid,” Lazard Capital Markets analyst Daniel Amir said in a note. “The highlight of the call was the soft guidance due to softness in mobile. While disappointing, we believe that this is likely a one-quarter issue and that growth will reaccelerate in the second half of the year.”
Needham analyst Quinn Bolton echoed this view, arguing in a note that “the muted outlook reflects a soft second quarter for the handset segment in general rather than market-share issues at Broadcom, and as we expect mobile-handset sales to strengthen in the second half of 2011, we would be buyers of Broadcom on weakness.”
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For the quarter, Broadcom said its profit totaled $228 million, or 40 cents a share, compared with $210 million, or 40 cents a share, in the year-earlier period. Revenue climbed to $1.82 billion from $1.46 billion.
Adjusted income was 68 cents a share in the latest period, according to a company spokesman.
On average, analysts had expected Broadcom to report a profit of 59 cents a share on revenue of $1.81 billion, according to a survey by Thomson Reuters.
Management said, "We expect our mobile and wireless segment revenue to decline in Q2 due to softness at some of our key customers.“ Comments taken from Broadcom’s Q1 earnings conference call.... sees Q2 revenue $1.75B-$1.85B vs. consensus $1.90B
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