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Shares of Broadcom, Other Chip Makers Dip Amid Concern Over Profit Forecasts

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From Bloomberg News

Shares of Irvine communications chip maker Broadcom Corp. and others in its field fell Tuesday amid concern the makers of gear for fast Internet service may miss profit forecasts for the fourth and first quarters, analysts said.

Broadcom, the top maker of chips for cable modems, fell 11% during trading but recouped most of it to end the day at $92.50, a loss of $1.69 a share. The company’s stock has lost 32% of its value this year.

Redback Networks Inc., which makes gear for fast Web access over telephone and cable lines, saw its shares fall $8.50 during trading before recovering a bit to close at $44.13, down $5.63 a share. The Sunnyvale company has lost half its value this year.

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Shares of 26 companies that make equipment for fast Internet service and hundreds of TV channels had tumbled an average of 64% this year. Since October, at least eight of the companies said fourth-quarter or 2001 profits would miss forecasts.

“You’ve already had profit warnings from most of them, and those that haven’t are going to come in lower anyway,” said Art Bonnel, manager of U.S. Global Investors Inc.’s Bonnel Growth Fund, which sold Broadcom shares earlier this year. “The first half of the year is going to be really tough.”

Broadcom is expected to earn 31 cents a share in the fourth quarter and 32 cents in the first quarter, according to First Call/Thomson Financial. Redback is forecast to earn 4 cents a share in the fourth quarter and 5 cents in the first, according to First Call.

Officials from Broadcom and Redback were not available to comment.

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