Broadcom Q1 Profit Surges; Shares Up - Update

(RTTNews) - Broadcom Corp. (BRCM) on Tuesday reported an increase in profit for the first quarter, as revenues and margins improved reflecting strength in the high-end smartphone and broadband markets. Both earnings and revenues for the quarter beat analysts' estimates with ease.

Irvine, California-based Broadcom's first-quarter profit rose to $209 million or $0.34 per share from $165 million or $0.28 per share last year. Results for the quarter included impairment charges of $143 million.

Excluding special items, adjusted earnings for the quarter rose to $0.64 per share from $0.33 per share a year ago. On average, 29 analysts polled by Thomson Reuters estimated earnings of $0.60 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the first quarter grew 3.7 percent to $2.06 billion from $1.98 billion last year. Analysts had a consensus revenue estimate of $2.01 billion for the quarter.

Gross margin for the quarter improved to 52.8 percent from 49.4 percent last year. Selling, general and administrative expenses dropped to $177 million from $185 million last year.

"Broadcom delivered better-than-expected results in the March quarter driven by strength in the high-end smartphone and broadband access markets," said Chief Executive Scott McGregor.

"Looking to the June quarter, we see operating performance continuing to strengthen on tight operating expense discipline and strong margins, consistent with our objective of driving profitable growth," McGregor added.

In June last year, Broadcom announced plans to exit its cellular baseband business, which designs chips used in connecting smartphones and tablets, in order to focus on its broadband and connectivity business. The company estimated costs savings of about $700 million a year with the wind-down.

For the second quarter, the company expects revenue of $2.10 billion, plus or minus $75 million. Analysts currently expect revenues of $2.07 billion for the quarter.

BRCM closed Tuesday's regular trading at $43.98, up $0.36 or 0.83%, on the Nasdaq. The stock further gained $2.44 or 5.55% in after-hours trade.