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Analyst Bearish on Chip Sales, Broadcom Slumps

Shares of Irvine-based chipmaker Broadcom Corp. slumped Wednesday after a slew of Wall Street analysts projected slowing chip sales ahead.

Investors sent Broadcom shares down more than 6% Wednesday on a recent market value of $17 billion.

Robert W. Baird & Co. analyst Tristan Gerra wrote in a research note that demand for communications chips made by Broadcom and others is slowing.

Gerra’s note is part of a recent flurry of bearish analyst notes that see slowing chip sales in the second half of the year due to a projected decline in PC sales.

Broadcom, which makes chips for computers, cell phones and other consumer electronics, isn’t likely to beat its own sales forecasts for the current quarter and could provide “below seasonal” guidance for the fourth quarter and the first quarter of next year, Gerra said, according to a report on financial news website Barrons.com.

Broadcom has seen “a deterioration of orders” for the current quarter, Gerra said.

Last month, Broadcom said it’s looking for third quarter sales of $1.7 billion to $1.8 billion, which at the midpoint represents an increase of about 40% over the third quarter of 2009 and in line with analysts’ average expectations of $1.75 billion in revenues.

The company didn’t give a profit outlook.

Analysts are expecting Broadcom to see adjusted profits of $357 million.

Gerra reiterated his “neutral” rating on Broadcom’s shares, which are up 20% since the start of the year.

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