Vendors Reforecast Earnings3/07/2001 5:24 AM Eastern
Broadband-equipment vendors Broadcom Corp., Microtune Inc. and CommScope Inc.
told Wall Street this week that they have lowered quarterly revenue estimates in
the wake of a sharp U.S. economy slowdown and customer order delays.
Chip giant Broadcom -- which on Feb. 7 indicated uncertainty about meeting
revenue projections -- said it received notice that 3Com Corp., one of its
largest customers, had terminated a 'significant' contract.
That, in part, caused Broadcom on Monday to cut its first-quarter earnings to
8 to 9 cents per share on revenue of between $315 million and $325 million.
Analysts had expected the company to earn 25 cents on revenue of $398
'In spite of the current challenges, we remain confident of Broadcom's
long-term prospects,' president and CEO Henry Nicholas III said in a prepared
statement. He added that Broadcom currently does not 'have the visibility to be
able to predict when this softness will abate.'
Adding insult to injury, shareholders have filed a federal class-action
lawsuit against Broadcom in the U.S. District Court for the Central District of
California, alleging that the company defrauded shareholders from July 30, 2000,
to Feb. 27, 2001.
The suit relates to charges that Broadcom granted warrants to customers in
exchange for product purchases and improperly accounted for them. The suit also
alleged that Broadcom executives sold off more than $80 million worth of common
stock before certain warrants came to light.
Broadcom shares were down almost 13 percent to $41.31 in early trading
Microtune, a maker of RF tuners for cable modems, also lowered its
first-quarter revenue projections after a large but undisclosed customer delayed
a product order.
Microtune's cable-modem manufacturing customers include Zoom Telephonics
Inc., Motorola Broadband Communications Sector, Cisco Systems Inc. and Com21
Inc., among others.
Microtune said first-quarter revenue is expected to drop 10 percent to 20
percent versus the $21.9 million it reported in the fourth quarter, but it
believes orders will pick up by the end of the second quarter, as inventory is
Microtune shares slid 56 cents Tuesday to $7.75, but they rebounded in early
trading Wednesday, up more than 24 percent to $9.63.
Hybrid fiber-coaxial equipment vendor CommScope also lowered its
first-quarter forecast, anticipating lower-than-expected earnings of between 27
cents and 30 cents per diluted share. Analysts were expecting about 33 cents per
CommScope said it will continue to employ cost-control measures until market
conditions improve. Last month, the company said it had initiated an eight-day
'rolling layoff' -- or unpaid time off -- that affects 15 percent to 20 percent
of the company's staff at any one time.