Broadcom Expects Sharper Sales Drop


Broadcom Corp., which already had warned that it expects to post a second-quarter loss, said Wednesday that sales probably will decline even further than anticipated because of weak demand for its communications chips.

The Irvine-based company expects second-quarter revenue to fall 32% to 35% below first-quarter revenue, which also was disappointing. The company previously had said it anticipated revenue would fall 23% from first-quarter revenue of $318.1 million.

The company expects to take a second-quarter charge from cost-cutting, including an unspecified number of job cuts, Chief Executive Henry T. Nicholas III said.

Broadcom also plans to realign business units and close some offices, he said in a statement issued after the close of regular and after-hours trading. The company is expected to discuss its plans today in a conference call with analysts.

Workers said Wednesday that they had received no word of layoffs.

The stakes are high.

Shareholders approved a plan late last month to enable employees to trade in their stock options, which have lost their value as Broadcom's share price tumbled in recent months, for new options that probably will be priced lower. But the maneuver will be available only for employees who remain with Broadcom.

Nicholas and Broadcom co-founder and chief engineer Henry Samueli have been scrutinizing each technology unit at the company. Broadcom had 2,706 employees at the end of March, including 945 in Orange County.

As the once-booming technology market ground to a halt, Broadcom's stock price fell sharply.

Broadcom lost $1.99 a share Wednesday, closing at $35.57 on Nasdaq.

The company's latest cut in its sales estimates would place second-quarter revenue between $206.7 million and $216 million. Analysts were anticipating revenue of $254.7 million, according to First Call/ Thomson Financial.

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