Broadcom forecasts quarterly revenue below expectations on broader demand weakness


The Broadcom Limited company logo is shown outside one of their office complexes in Irvine, California, U.S., March 4, 2021. REUTERS/Mike Blake

(Reuters) - Broadcom forecast fourth-quarter revenue slightly below Wall Street estimates on Thursday, on worries bleak enterprise spending and stiff competition in the networking chip space will outweigh benefits from a boom in artificial intelligence-led demand.

Shares of the San Jose, California-based company fell 3.4% in extended trading.

Soft enterprise demand, coupled with slower-than-expected recovery in consumer electronics markets such as smartphones, has also taken a toll on Broadcom's semiconductor business.

The entire software industry is feeling the pain of slashed IT budgets across enterprises, both in the U.S. and Europe. Broadcom's software portfolio has also been impacted by the same.

Even as the company has introduced new networking products to suit AI workloads, competition is rising from Nvidia's alternative to ethernet chips, InfiniBand and companies like Marvell Technology.

Broadcom's weak outlook reflects its exposure to traditional compute servers, where demand is feeble as it is being "cannibalized" by AI servers, said Summit Insights Group analyst Kinngai Chan.

"Demand is very mixed in the storage networking and broadband access markets," he added.

The chip company expects current-quarter revenue to be about $9.27 billion. Analysts on average expect revenue to be $9.28 billion, according to Refinitiv data.

Revenue in the third quarter was $8.88 billion. Analysts polled by Refinitiv expected revenue of $8.86 billion.

Excluding items, the company earned $10.54 per share in the quarter ended July 30, above estimates of $10.42.

(Reporting by Chavi Mehta in Bengaluru; Editing by Krishna Chandra Eluri)

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

   

Next In Tech News

Tax fraud investigators search Netflix offices in Paris and Amsterdam, says source
Singapore's Keppel to buy Japanese AI data centre amid AI boom
Tesla increases wages for staff at German gigafactory by 4%
Apple explores push into smart glasses with ‘Atlas’ user study
Japan's Kioxia sees flash memory demand almost tripling by 2028
Hacker gets into woman’s email, changes every password, tries to make purchases
Foxconn says Oct revenue +8.59% y/y, Q4 outlook good
Want to help a friend find love? Give a PowerPoint presentation
Can an Apple�Watch get AFib patients off bloodthinners?
South Korea fines Meta about $15 million over collection of user data

Others Also Read