Broadcom's full-year forecast fails to impress Wall Street, shares down

(Reuters) - Broadcom Inc's fourth-quarter earnings beat Street estimates on Thursday, but investors were put off by slowing growth in semiconductor business and a lukewarm revenue forecast for 2020, sending its shares down about 2% in extended trade. The 17-month long trade war between the United States and China and sanctions on China's Huawei Technologies pressured its core semiconductor business for the past few quarters. The company expects 2020 full-year revenue to be about $25 billion (£19.49 billion), plus or minus $500 million, beating analysts' estimate of $23.79 billion, according to IBES data from Refinitiv

Reuters December 13, 2019 06:07:23 IST
Broadcom's full-year forecast fails to impress Wall Street, shares down

Broadcoms fullyear forecast fails to impress Wall Street shares down

(Reuters) - Broadcom Inc's fourth-quarter earnings beat Street estimates on Thursday, but investors were put off by slowing growth in semiconductor business and a lukewarm revenue forecast for 2020, sending its shares down about 2% in extended trade.

The 17-month long trade war between the United States and China and sanctions on China's Huawei Technologies pressured its core semiconductor business for the past few quarters.

The company expects 2020 full-year revenue to be about $25 billion (£19.49 billion), plus or minus $500 million, beating analysts' estimate of $23.79 billion, according to IBES data from Refinitiv.

The outlook pointed to a weaker-than-expected wireless business, said Kinngai Chan, an analyst with Summit Insights Group.

He added that $25 billion is not a very strong outlook with its semiconductor business expected to grow at about 4% year-over-year to about $18 billion.

Broadcom, on a post-earnings call said that Symantec Corp's enterprise security unit, its latest $10.7 billion acquisition, is expected to contribute about $1.8 billion next year.

The 2020 guidance was actually a little light on the Street as revenue from Symantec was expected to be about $2 billion, said Christopher Rolland, analyst with Susquehanna Financial Group.

Shares of Broadcom initially rose after market on better-than-expected 2020 revenue forecast boosted by upcoming 5G adoption.

The semiconductor business will return to year-over-year growth in the second half of the company's fiscal year, Chief Executive Officer Hock Tan said in a statement.

Apple 5G smartphone ramp will drive year-over-year growth in its wireless business in second half of 2020, added Chan.

Brokerage BofA Global Research on Wednesday predicted that Apple 5G phones could make up nearly one-third of the global market for 5G smartphones in the next three years.

Fellow Apple supplier Qualcomm Inc forecast sales of 200 million 5G smartphones next year, which Wall Street analysts say includes 5G phones from Apple.

For the fourth quarter, Broadcom also beat revenue and profit estimates, boosted by growth in the software business that helps to manage and secure applications across mobile, cloud and mainframe platforms.

Broadcom reported revenue of $5.78 billion in the fourth quarter, edging past estimates of $5.73 billion.

Excluding items, the company reported profit of $5.39 per share, topping expectation of $5.35.

The company raised its target dividend by 23% to $3.25 per share per quarter for fiscal year 2020.

(Reporting by Ayanti Bera in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.