Broadcom said demand in its semiconductor business has “bottomed out”, taking some of the sting out of quarterly revenue that fell just shy of expectations as the chipmaker continues to deal with the fallout from the US-China trade spat.
In June, the trade dispute and Washington’s export restrictions targeting Huawei prompted Broadcom to cut its revenue outlook by $2bn to $22.5bn for fiscal 2019, with the company warning that geopolitical uncertainties had driven a slowdown in the chip sector.
Broadcom reiterated that revenue guidance Thursday, while also posting fiscal third-quarter earnings that outpaced Wall Street’s forecast.
“Looking at the semiconductor solutions segment, we believe demand has bottomed out but will continue to remain at these levels due to the current uncertain environment,” said Broadcom chief executive Hock Tan, who noted a “challenging market backdrop” during the quarter.
Broadcom booked overall net revenue of $5.52bn in its quarter that ended August 4, up from $5.06bn in the year-ago period but slightly below the $5.54bn expected by analysts polled by Refinitiv.
Net revenue in Broadcom’s semiconductor solutions unit fell about 5 per cent year-over-year to $4.35bn, but was up 6 per cent compared with the previous quarter.
Net income dropped to $715m from $1.2bn. On an adjusted basis, Broadcom earned $5.16 per share to beat the consensus view of $5.13.
Broadcom’s shares pared some of their initial losses in after-hours trading, sliding 1.4 per cent. The stock has gained more than 18 per cent on the year.
Broadcom, led by its dealmaking chief executive, announced last month it had come to terms on a $10.7bn deal to acquire antivirus software maker Symantec’s enterprise business, which offers services including cloud security and data loss prevention. The companies have said the deal is expected to close by the end of the calendar year.
However, private equity firms Permira and Advent International have approached Symantec about buying the entire company for more than $16bn. Beyond its enterprise business, Symantec owns the Norton and LifeLock brands.
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