UBS Warburg Cuts Estimates on Broadcom, Maintains Rating
UBS Warburg
reduced its earnings and revenue estimates on
Broadcom
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, but maintained a strong buy rating on the communications chipmaker, a day after the company's CEO left open the possibility of a revenue slowdown.
Shares of Broadcom fell $2.69, or 3.3%, to $80.13 in recent
Nasdaq
activity, after trading as low as $78.25 today.
The firm chopped 4 cents off its first-quarter earnings estimate, lowering the projection to 30 cents from 34 cents a share. UBS sliced its revenue projection to $425 million from $480 million. Nineteen analysts polled by
First Call/Thomson Financial
TheStreet Recommends
are calling for the company to earn 33 cents in the period.
Yesterday, Henry Nicholas, Broadcom's chief executive, said the company's growth isn't living up to its previous guidance. He
indicated that the company might not meet the previously stated forecast of 22% to 23% sequential growth. UBS said the company issued the cautious words yesterday because of uncertainty surrounding
Gateway's
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management changes and order delays from
Cisco
(CSCO)
.
The firm reduced its 2001 revenue projections for Broadcom to $2.075 billion from $2.34 billion, and lowered its estimate for revenue in 2002 to $3.43 billion from $3.63 billion. The earnings forecast for 2001 was lowered to $1.40 from $1.57 a share, and to $2.11 from $2.23 in 2002. The consensus estimate is $1.55 a share for 2001 and $2.07 for 2002, according First Call.
"We continue to regard Broadcom as one of the strongest and broadest companies in the communications chip group," UBS wrote in a research note. "We maintain our strong buy rating as we believe that in spite of the near-term uncertainty, we think Broadcom has among the strongest strategic positions among the companies we follow."
