Broadcom: Demand Trends Weak, Raymond James Says

Raymond James chip analyst J. Steven Smigie this morning cut his rating on Broadcom (BRCM) to Market Perform from Outperform, citing his view that “order trends are continuing to weaken as Q4 progresses.” The weak economy is one factor in the downgrades, but he sees some specific issues for Broadcom: Key customers Cisco (CSCO) and Hewlett-Packard (HPQ) are guiding for less-than-seasonal performance. He expects the set-top box market to “soften meaningfully” heading into Q1. Broadcom may see lower-than-expected baseband revenue from Samsung, he says. Increased competition in Bluetooth will mean lower revenue from that segment than previously expected, he asserts. Smigie cut his 2008 EPS estimate by a penny to $1.62 from $1.63; more meaningfully, for 2009 he goes to $1.12 from $1.30, and for 2010 he sees $1.39, down from $1.54. BRCM this morning is down 32 cents, or 2.1%, to $15.08. (link)