Broadcom pulls guidance, spooks investors

US chipmaker Broadcom saw its share price tank after scrapping guidance for its full fiscal year, ended November 1, 2020.

Hock Tan, CEO of Broadcom, in prepared remarks, said lack of visibility in the firm's global markets – because of the COVID-19 outbreak – meant that demand uncertainty was intensifying. "As a result," he said, "we believe it prudent to withdraw our annual guidance until visibility returns to pre COVID-19 levels."

When news broke, investors ran for cover. Broadcom's share price – listed on NASDAQ – slumped by 11% during the regular trading session.

Tan insisted, however, that the "fundamental semiconductor backdrop" had been improving and that there was no material impact on Broadcom's businesses due to COVID-19 in the first quarter (ended February 2, 2020).

Negative market side-effects of COVID-19 seem to be taking their toll, however, assuming Tan's assertion of an increasingly buoyant semiconductor market is correct.

Broadcom pegged fiscal second-quarter revenue guidance at between $5.55 billion and $5.85 billion, but analysts were apparently forecasting second-quarter revenues of $5.94 billion.

When Broadcom posted its fiscal year results for 2019, revenue guidance for fiscal 2020 was $25 billion, give or take $500 million. (See Broadcom sidelines wireless, plans unit sale.)

Year-on-year, Broadcom's first quarter 2020 revenues were flat, rising a miserly 1% to $5.86 billion. GAAP net income was $385 million, down $86 million from the same quarter in 2019.

— Ken Wieland, contributing editor, special to Light Reading