Broadcom (NASDAQ: AVGO) led a plunge in chip stocks Friday after the chipmaker missed revenue expectations and lowered guidance for 2019 citing a “broad-based” slowdown in demand and the U.S. crackdown on Huawei.
Broadcom’s revenue for the fiscal second quarter came in Thursday evening at $5.52 billion vs. the $5.68 billion expected by analysts. The chipmaker also said it now expects $22.60 billion in revenue for fiscal 2019, well bellow the $24.31 billion seen by analysts.
Operating income was $970 million, or 17.6 percent of net revenue. This compares with operating income of $555 million, or 9.6 percent of net revenue, in the prior quarter, and operating income of $1,201 million, or 24.0 percent of net revenue, in the same quarter last year.
Net income, which includes the impact of discontinued operations, was $691 million, or $1.64 per diluted share. This compares with net income of $471 million, or $1.12 per diluted share, in the prior quarter, and net income of $3,733 million, or $8.33 per diluted share, in the same quarter last year.
"We currently see a broad-based slowdown in the demand environment, which we believe is driven by continued geopolitical uncertainties, as well as the effects of export restrictions on one of our largest customers.
"As a result, our customers are actively reducing their inventory levels, and we are taking a conservative stance for the rest of the year,” Broadcom CEO Hock Tan said in a statement.
Broadcom shares lost $21.42, or 7.6% in early trading Friday to $260.18.
