Earnings estimates for leading chipmaker
Broadcom Corporation
(
BRCM
) have been on the uphill in the last ten days driven by the
company's positive revision for the fourth quarter outlook.
Last week, Broadcom stated that it now expects revenues to grow
to $1.80 billion, at the high end of the range estimated earlier.
The upgrade in guidance by management was driven by solid shipments
and tight operational management.
Broadcom had projected revenues around $1.7 billion - $1.8
billion for the fourth quarter with its third quarter earnings
conference call.
Product gross margin is now expected to be flat on a sequential
basis, compared to the previous estimate of being flat to down
slightly on a sequential basis.
Research & development and selling, general, and
administrative expenses are now expected to be down by $5 million
sequentially compared to the earlier estimate of being flat
sequentially.
Broadcom expects to exit 2011 with cash and equivalents of $5.1
billion, up from $4.2 billion at the end of September quarter,
driven by strong cash flow and completion of a debt offering.
Broadcom recently offered $500 million of senior notes. The
company expects to use the net proceeds from the offering to fund a
portion of its proposed acquisition of NetLogic Microsystems and
other general corporate purposes.
For the third quarter, Broadcom missed the Zacks Consensus
estimate by $0.06. Meanwhile, Broadcom was the only exception in
the semiconductor industry to have raised its outlook for the
fourth quarter of 2011. Other players such as
Altera Corporation
(
ALTR
),
Xilinx Inc.
(
XLNX
) and industry bigwig
Texas Instrument
(
TXN
) have all slashed their guidance for the December quarter citing
weak demand due to the slowdown in global economic conditions.
Europe continues to lag the results.
Consequently, most analysts covering Broadcom have upped their
estimates barring one exception, leading to a rise in estimates for
2011 and 2012.
We continue to maintain a Neutral recommendation on Broadcom.
Our recommendation is supported by a Zacks #3 Rank, which
translates into a short-term rating of Hold.
ALTERA CORP (
ALTR
): Free Stock Analysis Report
BROADCOM CORP-A (
BRCM
): Free Stock Analysis Report
TEXAS INSTRS (
TXN
): Free Stock Analysis Report
XILINX INC (
XLNX
): Free Stock Analysis Report
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