Broadcom Q3 Profit Down, But Tops View; Shares Up

(RTTNews) - Broadcom Corp. (BRCM) Tuesday reported a plunge in profit for the third quarter, hurt largely by hefty impairment charges related to the chip maker's planned exit from cellular base-band business. Nevertheless, on an adjusted basis, Broadcom's earnings for the quarter improved and also topped Wall Street estimates, due mainly to revenue growth and cost cutting measures.

Following the news, shares of Broadcom gained about five percent in after-hours trade.

Irvine, California-based Broadcom's s third-quarter profit dropped to $98 million or $0.16 per share from $316 million or $0.55 per share last year.

Results for the quarter included write-downs related to the company's decision to exit the cellular base-band business totaling $114 million or $0.19 per share, and additional impairment charges of $200 million or $0.33 per share.

Excluding one-time items, adjusted earnings for the quarter rose to $569 million or $0.91 per share from $460 million or $0.76 per share last year. On average, 35 analysts polled by Thomson Reuters expected earnings of $0.84 per share for the quarter. Analysts' estimates typically exclude special items.

In June, the semiconductor company announced plans to wind-down its cellular baseband business, which designs chips used in smartphones and tablets, in order to focus on its broadband and connectivity business, with cost saving of about $700 million.

Broadcom's revenues for the third quarter rose 5.3 percent to $2.26 billion from $2.15 billion last year. Analysts had a consensus revenue estimate of $2.18 billion for the quarter.

"Our strong performance was driven by the Broadband and Connectivity business and diligent expense management. Longer term, the company's renewed focus on its core businesses is expected to produce improved margins and cash flows, enabling increased capital return," said Chief Executive Scott McGregor.

Looking forward to the fourth quarter, Broadcom said it expects revenues of about $2.00 to $2.15 billion. Analysts currently estimate revenues of $2.11 billion for the quarter.

BRCM closed Tuesday's trading at $37.33, up $1.03 or 2.84%, on the Nasdaq. The stock further gained $1.84 or 4.93%, in the after-hours trade.