Seeking Alpha

Broadcom hikes Q4 guidance, shares +2.5% premarket

  • Two months after providing disappointing Q4 guidance, Broadcom (BRCM) has upped its revenue guidance range for the quarter to $2B-$2.05B from a prior $1.975B (+/- 3%). (PR)
  • In addition, the chipmaker now expects it Q4 gross margin to be down 50-75 bps Q/Q (prior guidance was for a 50-100 bps drop), and for its R&D/SG&A expenses to be up only $30M-$50M Q/Q (prior guidance was for a $30M-$50M increase). The guidance hike comes as Broadcom's analyst day gets going (webcast).
  • Broadcom attributes the improved top-line guidance to "better-than-expected revenue in each reportable segment, particularly in Infrastructure & Networking." It's worth noting optical component vendor Finisar recently provided strong guidance, thanks in large part to healthy data center-related sales. The major investments being made by Web/cloud service providers in their data center infrastructures could be playing a role.
  • Broadcom's guidance could have positive implications for networking chip rivals Marvell (MRVL), Cavium (CAVM), and LSI.

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