UPDATE: Broadcom shares fall 2% premarket after company says wireless was weak in Q2
Broadcom Inc. shares slid 2% premarket Monday, after the company narrowed the range for its second-quarter non-GAAP revenue outlook and provided an initial outlook for the third quarter. The chip maker said it expected second-quarter non-GAAP revenue of $5.000 billion, plus or minus $24 million. The company defines non-GAAP revenue as including de minimis amounts of expected licensing revenue that is not included in GAAP revenue due to the effects of purchase accounting for acquisitions. Non-GAAP measures that substitute individually tailored revenue recognition and measurement methods for GAAP could violate SEC rules. The FactSet consensus is for revenue of $5.009 billion. For the third quarter, the company said it expects non-GAAP revenue of $5.050 billion, plus or minus $75 million. The FactSet consensus is for revenue of $5.231 billion. "Our second quarter results reflect robust demand from datacenters which drove strong growth in our wired and enterprise storage segments while wireless was weak," Chief Executive Hock Tan said in a statement. "Looking ahead to our third fiscal quarter, we expect continued strength in demand from datacenters while wireless remains weak." The company continues to target full-year free cash flow that exceeds 40% of revenue. Shares have gained 5.4% in the last 12 months, while the S&P 500 has gained 12%.