Broadcom Corp., a chipmaker many analysts have pegged to hold up better than others during the downturn, slumped Friday on Wall Street, a day after warning about results for the current quarter.
The stock was down about 9% near the close of Friday trading on a market value of $8.1 billion.
For the first quarter, Broadcom said it’s expecting sales of $800 million to $875 million, well below the $953 million analysts had been expecting.
The company didn’t give a profit outlook. Analysts are looking for profits of $87 million.
“We believe the current economic slowdown will continue to negatively impact our business as demand continues to decrease and settle into new levels and channel inventory adjusts accordingly,” Chief Executive Scott McGregor said.
The company has been working to control its costs.
Until now, Broadcom hadn’t announced any job cuts but said it had been holding off on filling open positions.
This time around, McGregor said the company is expecting to cut some 200 jobs at its sites around the world. The move slashes about 3% of Broadcom’s total workers.
Thirty jobs will be lost from Broadcom’s Irvine headquarters.
“We have been reducing controllable ongoing expenses since the third quarter of 2008 and are implementing further cost saving measures this quarter, including a delay in salary increases, a reduction in our workforce and a variety of other belt tightening actions on discretionary spending,” McGregor said in a statement.
The poor outlook comes after Broadcom swung to a loss in the fourth quarter.
Including one-time charges for acquisitions, write-downs on assets, research and development and other costs, Broadcom swung to a loss of $159 million, compared to roughly $90 million in profits a year earlier.
Excluding the charges, Broadcom would have seen roughly $41 million in profits, down 76% from the same period a year ago and falling well short of analysts’ expected $138 million in profits.
The company reported $1.13 billion in revenue, up 10% from the year ago quarter and beating analysts’ outlook of $1.07 billion in sales.
Analysts had largely absorbed the news of a tough fourth quarter when the maker of chips for consumer electronics, computers and networking gear cited slowing demand and lowered its quarterly outlook late last year.
Despite the less-than-rosy outlook, analysts are still pretty optimistic about Broadcom.
Broadcom has plenty of cash on hand, minimal debt and a solid footing in several key markets for chips, company watchers say.
At a day with analysts in December, the company said it’s looking to grab market share during the downturn and scout for acquisitions that would expand its footprint in certain product lines.
Broadcom “may actually emerge somewhat stronger as they take market share from possibly weaker players,” said Tim Luke, a Barclays Capital analyst in New York.
