A sell-off in Broadcom (NasdaqGS: BRCM) was a headwind for technology and semiconductor exchange traded funds (ETFs) Wednesday as investors punished the stock after the company announced a weak second-quarter revenue forecast.
Broadcom shares were down more than 10% Wednesday morning in active trade.
“Broadcom reported first-quarter results that were in line with our expectations, but gave investors a mildly disappointing second-quarter outlook,” said Morningstar analyst Brian Colello in a note on the earnings report.
“Even though handset manufacturing activity should improve in the June quarter, Broadcom expects wireless chip sales to be down due to market softness at key customers,” the analyst wrote. “We’re mildly concerned about this outlook, as we expect robust growth from Broadcom’s wireless baseband chip business in the years ahead as the company should be able to achieve incremental share gains in the competitive wireless chip industry.”
ETFs that have the largest stakes in Broadcom include iShares PHLX SOX Semiconductor Sector Index Fund (NasdaqGM: SOXX), Broadband HOLDRs (AMEX: BDH) and Semiconductor HOLDRs (AMEX: SMH).
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.