Broadcom raises Q4 outlook amid industry turmoil

Summary:Broadcom raised its outlook for the fourth-quarter on stronger demand for its chips, some of which go into Apple's range of smartphones and tablets.

Global chipmaker Broadcom raised its fourth-quarter outlook after receiving a stronger demand for its microchips.

The company's financial guidance was updated to include increased net revenue to the high end of the prior range from $1.7 billion to $1.8 billion. Analysts had expected Broadcom to hit the $2 billion mark.

It was also more upbeat about its product gross margins and overhead costs, expecting margins will be "roughly flat" with the third-quarter. Included in its overheads, research and development is estimated to be down by $5 million from the last quarter, compared to October's projections that they would be unchanged.

The California-based company, which provides chips for wireless processors -- some used in Apple products, like the iPad and iPhone -- had previously warned that demand across its business segments could be hurt amid difficult economic times and an industry 'slowdown'.

Many companies had lowered their outlooks due to the floods in Thailand, which has slowed production and increased hard drive consumer sales costs.

PC makers are likely to power through the fourth-quarter without too much of a problem, yet the first-quarter of next year could be testing times for the industry.

The European debt crisis also shared its difficulties with the industry, which led Greece to come close to bankruptcy, and the single-currency Eurozone in dire difficulties. Scott McGregor, Broadcom's president and chief executive officer, downplayed the risk to future demand of its chips.

But today, the company attributed "solid shipments and tight operational management". The chipmaker expects to end the fourth-quarter with an estimated $5.1 billion in cash and a completed debt offering, Reuters reports..

Broadcom's shares flew up by nearly 7 percent this morning to nearly $30 a share.

Related:

Topics: Processors, Hardware

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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