Broadcom pulls guidance as coronavirus continues to hamper iPhone production
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SAN JOSE, California — Chipmaker Broadcom Inc. (Nasdaq: AVGO) withdrew its financial guidance and missed earnings expectations for its most recent quarter, a move that could cause worries for the company’s factory in Fort Collins.
The company posted revenue of $5.86 billion and an earnings-per-share figure of $5.25 for the quarter, missing Wall Street consensus estimates by $130 million and 11 cents respectively, according to data compiled by Seeking Alpha.
In a call with analysts Thursday, CEO Hock Tan said the company didn’t see any major impact on its business because of the spread of the COVID-19 virus in China and around the world in the last quarter of 2019.
“But frankly, visibility is bad and confidence continued to erode. So as a result, we believe it is only prudent that we withdraw our annual guidance until such time that visibility returns to pre-COVID-19 levels,” he told analysts.
In mid-February, Apple told investors it would miss its revenue projections for the quarter because its factories and retail stores in China remained closed at the time. Weeks earlier, Broadcom signed a pair of deals with Apple to supply “specified high-performance components and modules” over the next 3½ years, which are estimated to provide as much as $15 billion in revenue.
Those parts are likely made in Broadcom’s Fort Collins location, according to disclosures within the company’s most recent annual report with the U.S. Securities and Exchange Commission.
However, Apple reopened all 42 of its Chinese stores over the course of this week.
Tan told analysts the slowdown of the spread in China is providing for a recovery in demand, but revenues could drop between 5 and 10 percent if the COVID-19 virus becomes as intense in other markets as it did in China.
“We’re looking over at the U.S. and Europe now, and we’re seeing that going into its full-blown glory,” he said. “Can we extrapolate what we see in China over here? To be honest, we don’t know.”
Broadcom employs about 1,500 people in its Fort Collins manufacturing plant and about 500 people in its Broomfield office, according to previous counts from local economic-development groups in 2018 and 2019.