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Idealab runs out of ideas as US tech firms teeter

Idealab, the incubator behind eToys, is to shut its Silicon Valley operation, leaving just three protégé start-ups to continue operations from the firm's Palo Alto offices, and with the loss of 33 staff.

By Deborah Schofield

Published: 7 March 2001 13:32 GMT

The closure heralded a day of profit warnings from US technology firms. Modem chip manufacturer Broadcom reported that first quarter earnings will be lower than expected, following the loss of a big customer order.

Earnings are now expected to be eight to nine cents per share on revenue of $315m to $325m. Previous forecasts predicted 25 cents a share on revenue of $398m.

The downturn came after network equipment maker 3Com cancelled a $361m order. Last week 3Com reported that its losses for the fiscal third quarter were set to double, and announced it would lay off 13 per cent of its workforce.

Fibre optic component maker JDS Uniphase also had a rough day, announcing that it will lower third and fourth quarter earnings forecasts because of weak customer demand.

Third quarter earnings are expected to be 14 cents per share on revenue of $925m, below previous forecasts of 17 cents a share. Fourth quarter results are expected to be similar.

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