Broadcom revises first-quarter guidance

(Telephony) Investors awoke Wednesday morning to discover that Broadcom had lowered its earnings and revenue projections significantly for the first quarter 2001.

The communications chip manufacturer issued a release late Tuesday night outlining its revised outlook, citing a sluggish market, significant slowdown in customer orders and a contract termination with 3Com.

Broadcom reduced its pro forma earnings per share forecast for the first quarter by 68% from First Call/Thompson analysts’ consensus projection of 25 cents per share to between 8 cents and 9 cents.

The company also restated revenues to between $315 million to $325 million.

“The problem is that there’s too much inventory and that demand has fallen off, so you have the worst of both worlds,” said Jack Geraghty, senior vice president at Gerard Klauer Mattison & Co. “Slowdown is one thing, but demand has flat out gone down relative to where it was in the fourth quarter.”

In Nasdaq stock trading, Broadcom re-established its 52-week low when shares fell 15.4% from Tuesday’s close price of $47.875 to $40.50.

The previous low for the past 12 months was $40.766, far from its 52-week high in August of $274.75.