Shares of Irvine-based chipmaker Broadcom Corp. closed down 7% on Friday as some investors figured the recent run-up in the chipmaker’s shares was overdone.
Broadcom had a recent market value of $13 billion.
The selloff came despite good quarterly results from Broadcom on Thursday.
But the company’s solid numbers and generally positive outlook may not have been enough for some investors to justify a 70% run-up in the stock before Friday’s selloff.
Some analysts pointed to investors cashing out profits after the run-up and Microsoft Corp.’s disappointing results, which weighed on tech stocks Friday.
Others cited ongoing concerns about Broadcom’s profit margins and worries about products.
Broadcom, which makes chips for networking gear, computers and consumer electronics, on Thursday reported an adjusted profit of $64.7 million, in line with expectations after excluding charges and a gain.
The company’s net income including charges and a gain came in at $13 million, down 90% from a year earlier.
Broadcom’s net income included a $50 million charity expense and a $65 million gain from a recent legal settlement with San Diego-based Qualcomm Inc.
The company beat Wall Street expectations on sales for the quarter at $1.04 billion, down 13% from a year earlier but more than the $982 million analysts expected on average.
The revenue figure includes $67.3 million in royalties from Qualcomm.
Excluding royalties, Broadcom’s revenue came in at $966 million, in line with adjusted expectations.
For the current quarter, Broadcom said it foresees sales at $1.1 billion to nearly $1.2 billion.
Analysts on average were forecasting sales of $1.02 billion for the current quarter.
Broadcom didn’t give a specific profit outlook but said it expects its gross product margin to increase by around 125 basis points from the second quarter.
The company said it is seeing a “more stable ordering pattern.”
“Our operating strategy for 2009 remains focused on managing our business to gain share and generate positive quarterly cash flow from operations,” Chief Executive Scott McGregor said.
