Traders Sell Broadcom (BRCM) Amid Bottom-Line Miss

October 23, 2009 3:45 PM EDT

Last night, Broadcom Corp. (Nasdaq: BRCM) reported third quarter EPS of $0.16, falling well short of the analyst estimate of $0.33, although sales of $1.25 billion did come in over the market estimate of $1.16 billion.

Shares of Broadcom fell more than 7% today, settling around the $28.50 level.

Revenue for the quarter was 3.4 percent lower than the year-ago quarter, however a 20.6 percent increase over the second quarter results. For the nine-month period ending on September 30, 2009, Broadcom’s net revenue was $3.148 billion. This represents a decrease in net revenue of 10.9 percent from the $3.532 billion reported for the nine months ended September 30, 2008.

Broadcom, while down from the previous year’s results, is optimistic, seeing several signs of growth forming.

"Broadcom executed well in the third quarter, generating revenue growth of over 20% sequentially for the second quarter in row," said Scott A. McGregor, Broadcom's President and Chief Executive Officer. "This strong revenue growth is well above the semiconductor industry growth rate, and was driven by a combination of our target markets continuing to recover, new product ramps and the breadth of Broadcom's product line."

Taking a look at the analyst sentiment:

• FBR analysts maintained an Outperform status for Broadcom, citing the second consecutive plus-20 percent sequential growth quarter.
  
• Analysts at Kaufman Bros. are maintaining a Hold rating on Broadcom, noting the strong growth over the last half year; however feel that there is little room for company growth.
  
  “We believe, at current levels, that growth recovery is factored in and expect limited further margin expansion opportunity near term” Kaufman analysts said.

Related Categories

Earnings
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Related Entities

• Kaufman Bros.
• Citi

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