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AVGO Stock Fell After Broadcom Lowered Guidance, Semiconductor Stocks Follow

By Zacks Investment ResearchStock MarketsJun 14, 2019 03:32AM ET
www.investing.com/analysis/avgo-stock-fell-after-broadcom-lowered-guidance-semiconductor-stocks-follow-200431802
AVGO Stock Fell After Broadcom Lowered Guidance, Semiconductor Stocks Follow
By Zacks Investment Research   |  Jun 14, 2019 03:32AM ET
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Broadcom (NASDAQ:AVGO) presented their second quarter earnings on Thursday after market close, and the call, as described by CNBC's Jim Cramer, was "truly depressing."

Broadcom beat Zacks Consensus Estimates for earnings with $5.21, $0.04 higher than estimated. But, Broadcom’s revenue of $5.52 billion came in 2.58% below our revenue estimate. Broadcom also lowered its guidance for fiscal 2019 revenue to $22.5 billion. This is significantly below the Zacks Consensus Estimate of $24.3 billion.

Much of the lowered revenue guidance was due to decline in overall demand, along with the blacklisting of Huawei by the U.S. according to the company. After hours trading on Thursday saw the stock drop over 8% on the back of Broadcom’s new guidance. Shares of AVGO also opened lower Friday and were down over 6.5% through morning trading.

Industry Downturn?

"The environment is very, very nervous," Broadcom CEO Hock Tan said during an analyst call. This outlook has given investors a lot to worry about just as the industry seemed to be on a road to recovery from the trade war fears that were reignited last month and hurt the market.

The slowdown in revenue is not expected to be limited to Broadcom. Broadcom’s downcast revenue guidance helped send other chip stocks down as it signaled possible industry-wide headwinds. Micron Technology (NASDAQ:MU) , Texas Instruments (NASDAQ:TXN) , and NVIDIA (NASDAQ:NVDA) all tumbled more than 2% Friday. Meanwhile, other tech companies like Apple (NASDAQ:AAPL) and Cisco (NASDAQ:CSCO) took hits, albeit smaller than those of the semiconductor stocks, as the concern regarding the demand for tech products grew even larger.

Even companies that have been significantly outperforming the market recently felt the impact. Industry standouts Advanced Micro Devices (NASDAQ:AMD) dipped over 2.5%.

Broadcom’s earnings call provided additional clarity for the industry’s outlook. Overall, the blacklisting of Huawei seems to also be a major problem for many companies in the industry. As one of the three largest cellphone manufacturers, alongside Apple and Samsung (OTC:SSNLF) , Huawei is a huge source of revenue for some semiconductor companies. This loss in revenue, as well as the "broad-based" decline in demand for semiconductors, contributed to indexes declining through mid-day Friday.

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Cisco Systems, Inc. (CSCO): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Broadcom Inc. (AVGO): Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

Samsung Electronics (KS:005930) Co. (SSNLF): Free Stock Analysis Report

Texas Instruments Incorporated (TXN): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

Micron Technology, Inc. (MU): Free Stock Analysis Report

Xilinx, Inc. (NASDAQ:XLNX): Free Stock Analysis Report

Original post

Zacks Investment Research
AVGO Stock Fell After Broadcom Lowered Guidance, Semiconductor Stocks Follow
 
AVGO Stock Fell After Broadcom Lowered Guidance, Semiconductor Stocks Follow

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