Semiconductor solutions provider Broadcom Corp. (BRCM: Quote), said Tuesday its profit for the second quarter slid from last year as lower gross margin as well as higher research and amortization costs offset increased revenue. Nonetheless, quarterly earnings topped Street estimates, as did sales.
Moving forward, Broadcom provided sales outlook for the third quarter, the midpoint of which is indicated to miss current Street estimates.
Broadcom, which makes chips used in smartphones and network equipment, said its revenue for the quarter grew 9.7 percent from a year ago. The growth comes amid strong consumer demand for devices made by Apple Inc. (AAPL) and Samsung that use chips made by Broadcom.
CEO Scott McGregor said, "Broadcom delivered record revenue in Q2 with strength across all three business groups."
Nevertheless, the quarterly sales growth was somewhat offset by product gross margin that declined to 46.7 percent from 49.6 percent last year. Total expenses for the quarter jumped to $1.80 billion from $1.63 billion in the prior year, reflecting increased research and amortization costs.
Irvine, California-based Broadcom reported second quarter net income of $160 million or $0.28 per share, down from $175 million or $0.31 per share last year.
Excluding items, earnings for the quarter were $435 million, compared to $420 million a year ago. On a per share basis, earnings were $0.72, flat with last year, on a higher share count. On average, 36 analysts polled by Thomson Reuters expected earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.
Broadcom reported revenue of $1.97 billion, compared to $1.80 billion last year. Forty analysts had a consensus revenue estimate of $1.95 billion for the quarter.
Product revenue increased to about $1.92 billion from $1.74 billion last year. Income from Qualcomm agreement was $48 million, compared to $52 million in the prior year.
Looking ahead, Broadcom expects third quarter revenue in the range of $2.00 billion to $2.15 billion. Analysts currently estimate revenue of $2.11 billion.
Broadcom anticipates gross margin for the period to be up 200 basis points from the second quarter 2012.
Separately, Broadcom introduced what it calls the industry's first complete 5G WiFi combo chip for smartphones, tablets, ultrabooks and other mobile devices. The company said the BCM4335 chip furthers its wireless connectivity leadership.
With 3X faster speeds, consumers can more quickly download web content from a mobile device, and synch large files such as videos, making it more power efficient.
BRCM closed Tuesday's trading at $30.77, down $0.21 or 0.68%, on a volume of 7.3 million shares on the Nasdaq. In after hours, the stock gained $0.87 or 2.83%. In the past year, the stock trended between $27.59 and $39.66, on a three-month average volume of 8.15 million shares.
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by RTT Staff Writer
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