Broadcom Corp warned that its revenue would likely fall this quarter from the third quarter because of industry softness.
Shares in the maker of chips for products from cellphones to television set-top boxes fell about 4 percent after it forecast fourth-quarter revenue of $1.7 billion to $1.8 billion compared with Wall Street expectations for revenue of $2 billion, according to Thomson Reuters I/B/E/S.
The forecast reflects potential industry softness, said Chief Executive Scott McGregor. He did not give details.
Instead he said the company's long-term strategy is to continue to outpace the semiconductor market.
The warning comes after rival chip maker Texas Instruments said its revenue could fall 10 percent this quarter.
RBC Capital Markets analyst Doug Freedman said he was surprised because Broadcom focuses mostly on communications products such as phones and network equipment. Its clients include Apple Inc, which uses Broadcom chips in its iPhone.
I don't think anybody expected Broadcom to be guiding revenue down 10 percent, said Freedman. In particular, he was surprised that the forecast decline was in line with TI, which, unlike Broadcom, is exposed to areas such as industrial equipment, which is suffering because of economic weakness.
People thought handsets was going to pull (Broadcom) through, Freedman said. This shows that communications is also going through some rightsizing.
The company also said fourth-quarter gross profit margins would be flat to slightly down from the third quarter.
Broadcom's third-quarter revenue rose to $1.957 billion from $1.81 billion a year ago. Wall Street was expecting $1.952 billion.
It reported a profit of $270 million, or 48 cents per share, compared with $328 million, or 60 cents per share, in the same quarter a year earlier.
Broadcom shares fell to $34.30 in after-hours trading after closing down 4 percent at $35.80 on the Nasdaq stock market.
(Reporting by Sinead Carew; editing by Tim Dobbyn, Phil Berlowitz)