Broadcom third-quarter results beat views, stock jumps

October 21
8:51 PM 2014

Broadcom (BRCM.O) posted third-quarter results on Tuesday that exceeded Wall Street's expectations as the chipmaker focused on networking and smartphone chips, sending its shares 5 percent higher.

Broadcom, whose wifi connectivity chips are used in Apple's iPhones, reported third-quarter revenue of $2.26 billion, up 5.3 percent from the year-ago period. Analysts on average had expected third-quarter revenue of $2.17 billion, according to Thomson Reuters I/B/E/S.

The company said it saw strength in broadband and connectivity chips in the quarter. Broadcom may have received a boost from brisk sales of Apple's newest smartphones, Bernstein analyst Stacy Rasgon said.

In the third quarter, Broadcom had a net profit of $98 million, or 16 cents a share, compared with a net profit of $316 million, or 55 cents a share, last year. Non-GAAP earnings per share were 91 cents in the third quarter. Analysts on average expected 84 cents.

It said revenue in the fourth quarter would be $2.0 billion to $2.15 billion, with the midpoint of its forecast at $2.075 billion.

Analysts on average had expected third-quarter revenue of $2.17 billion and fourth-quarter revenue of $2.11 billion.

Broadcom's report comes as the company winds down its money-losing cellular baseband chip business. Broadcom struggled to compete against larger rival Qualcomm Inc (QCOM.O), which has a major lead in 4G cellphone technology increasingly used in smartphones.

Getting out of baseband frees up cash to return to shareholders and lets Broadcom concentrate on its better-performing networking and broadband businesses. However, that may leave the chipmaker at a competitive disadvantage selling its wifi chips in the smartphone market.

As well as Apple, the Irvine, California, company supplies wifi chips for Samsung Electronics' Galaxy S5 and other high-end handsets.

Broadcom's stock rose about 5 percent in extended trading after closing up 2.84 percent at $37.33 in regular Nasdaq trade.

© 2022 VCPOST, All rights reserved. Do not reproduce without permission.


Join the Conversation

Subscribe to VCpost newsletter

Sign up for our Deals of the Day newsletter.
We will not spam you!

Real Time Analytics