Ahead of the Bell: Broadcom slumps in premarket
Broadcom falls in premarket trading after 3Q revenue outlook disappoints
NEW YORK (AP) -- Communications chip maker Broadcom Corp. fell in premarket trading after the company reported a disappointing sales outlook for the third quarter.
The company said late Tuesday that it took a loss in the second quarter after absorbing a $501 million charge, most of which came from writing down the value of NetLogic Microsystems, acquired in February 2012 for $3.7 billion.
Excluding such one-time items, results were in line with analysts' expectations. But Broadcom's revenue outlook for the current quarter fell short. The company expects sales of $2.05 to $2.2 billion — analysts polled by FactSet predicted stronger sales of $2.25 billion.
Citigroup analyst Glen Yeung cut his rating on Broadcom stock to "Neutral" from "Buy" on concern that slowing growth in demand for smartphones and increasing competition from cheaper alternatives will hamper Broadcom's sales.
Broadcom fell $3.13, or 9.8 percent, to $28.70 in trading before the opening bell.
Broadcom's stock had already slumped 4.3 percent Tuesday after Pacific Crest analyst Michael McConnell cut his rating on the stock because he thinks Apple may stop using Broadcom's products in its mobile devices. The analyst estimates that Broadcom gets about a third of its revenue from Apple.
Broadcom CEO Scott McGregor said on a conference call with analysts that the company sees market share "in good shape" the rest of the year.
