Shares of Irvine-based Broadcom Corp. took a beating after the chipmaker said it had it a murky outlook for the current quarter.
“Mixed outlooks from a few of our larger customers are causing a lower than normal level of visibility into our near-term results,” Chief Executive Scott McGregor during the company’s first-quarter earnings call.
The cloudy forecast wasn’t received well by investors. Shares fell as much as 6% on the news last month.
Broadcom “waits for the company with the ‘killer application’ to grab its technologies,” said Suji De Silva, analyst with Cathay Financial in New York.
“They often have a hard time saying when their products will hit large with the customers,” he said.
The company saw its first-quarter profit plunge by nearly half. Revenue was flat from a year earlier.
The results still beat analysts’ expectations, which they tempered given the industry’s buildup of unsold chips dating back to last year.
The chip glut had analysts keeping a close eye on Broadcom’s inventories.
It was turning stockpiles of chips into sales at a rate of 8.6, down slightly from 8.8 in the fourth quarter, according to McGregor.
The company reduced its inventory by $2.4 million from the fourth quarter to $200.4 million.
Chips for Bluetooth products took the biggest hit as the company saw less demand from cell phone makers, including from Schaumburg, Ill.-based Motorola Inc. Motorola accounts for about 10% of Broadcom’s sales.
Other analysts still have high hopes for Bluetooth.
“We see portable media devices and digital televisions as major demand drivers for the semiconductor industry,” said Larry Cao, analyst at Morningstar Inc. in Chicago, in a recent note to clients.
Cao mentioned Broadcom as one of the top chipmakers that’s benefited from the success of the Nintendo’s latest game phenom, Wii. Broadcom makes Bluetooth chips for the game console.
Using standard accounting, Broadcom’s first-quarter profit was $61 million, down from about $118 million a year earlier.
Excluding stock compensation, acquisition costs and other charges, profit came in at $175 million, down from about $222 million a year earlier.
Wall Street was expecting a profit of about $148 million before charges.
Revenue came in at $901.5 million, above expectations of $897 million.
The chipmaker expects business to pick up in the second half of the year, McGregor said. The company forecasts revenue of $890 million to $905 million for the current quarter.
In March, the company moved to a 685,000-square-foot campus at University Research Park in Irvine, leaving its longtime Irvine Spectrum headquarters.
The company hired an additional 340 people in the fourth quarter, according to McGregor.
Broadcom has nearly 6,000 workers worldwide.
The company had a market value of about $18 billion at a recent check.
MSC New Hire
Santa Ana-based MSC.Software Corp., which makes software used by manufacturers to test their designs, said it appointed a new president of its Japanese unit.
Toru Kawaguchi is set to head field operations of MSC.Software Ltd., which is based in Nagoya.
Kawaguchi had executive positions at Cincinnati-based Think3 Inc., Autodesk Inc. and Structural Dynamics Research Corp.
Before that, he worked in mainframe computer sales for the manufacturing division of IBM Japan Ltd.
About 30% of MSC’s sales are from the Asia Pacific region. It doesn’t break out sales by country.
The company counted about $260 million in revenue last year.
Irish Blood
When in doubt, hire a fellow countryman.
That seems to be the strategy adopted by Irishman John Coyne, chief executive of Lake Forest-based disk drive maker Western Digital Corp.
Last week, the company said it hired away a chief financial officer from Irvine’s Sage Software Inc.
Tim Leyden, 55, started early last week. He will report to current Chief Financial Officer Steve Milligan. He’s set to fully take the position starting Sept. 1.
Leyden had his first go around at Western Digital from 1983 through 2000, where he served in various positions at the company’s storage controller, chip and hard drive businesses, both in his native Ireland and in the U.S.
During that time, he worked closely with Coyne, who became chief executive in January. They worked together on the acquisitions that got the company into the hard drive business in 1988.
Leyden was senior vice president and chief financial officer at Sage Software, a unit of Britain’s Sage Group PLC.
No word yet on a replacement for Sage.
