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Broadcom raises Q4 outlook amid industry turmoil

By | December 14, 2011, 6:52am PST

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.

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Outlook, Broadcom Corp., Chip Company, Semiconductors, Hardware, Zack Whittaker

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

Disclosure

Zack Whittaker

I worked briefly with Microsoft UK in 2006 but no longer have any connection with the company. Regardless, I remain impartial and unbiased in my views.

I don't hold any stock or shares, investments or industrial secrets in any company, but have signed confidentiality agreements with a number of UK and U.S. organisations, whose names I am not at liberty to disclose.

I was involved with Kent Union, the University of Kent's student union, undertaking voluntary, non-salaried, elected positions between early 2009 and mid-2010.

No other company, body, government department, non-governmental organisation or third sector organisation employs me or pays me a salary in any capacity whatsoever.

As a freelance journalist, whenever expenses are given and taken by a company that is not CBS Interactive, these will be disclosed in each relevant post to ensure transparency.

I currently work with a UK law enforcement unit, but this is an entirely separate position which bears no connection to other work.

(Updated: 23rd October 2011)

Biography

Zack Whittaker

Zack Whittaker, criminologist who studied at the University of Kent, UK, is a journalist, writer and broadcaster.

After studying criminology at university, though still in his early-20's, he has already had a series unconventional work and voluntary positions. He has worked with researchers studying neurological illnesses like Tourette's syndrome (which he suffers from), has given lectures on the nature of disabilities in the public community, and occasionally ends up speaking on television and radio discussing the events of the day.

He first had academic work published at the age of 22, then still an undergraduate, and has been cited by a wide range of publications: from CNN, the Huffington Post, AllThingsDigital, The Atlantic Wire and CBS News.

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