Broadcom considers sale of cellular broadband business
Broadcom Corp. said it will explore strategic options for its cellular baseband business, including a possible sale.
The company has hired JPMorgan Chase & Co. to assist. A sale or wind-down of the business is expected to reduce expenses by about $700 million, the Irvine company said Monday.
Baseband chips are used to connect phones to cellular networks, a business dominated by rival Qualcomm Inc. Shares of Broadcom slipped last year amid delays introducing the chips, hurting its ability to gain orders from smartphone makers such as Apple Inc. and Samsung Electronics Co.
Broadcom will likely record a charge related to the possible sale or wind-down of the business, according to the statement. The company also said it plans to reinvest about $50 million of its cost savings into projects in the broadband, infrastructure and connectivity businesses.
Sales in Broadcom’s mobile division slumped 15% to $846 million in the first quarter. In April, Chief Executive Scott McGregor said that the company has mobile-phone chips that will work on the new long-term evolution standard coming to market this year. The success of those products and the economic viability of the unit will determine whether Broadcom continues to invest or shut it down.
“We don’t do businesses to lose money,” McGregor said.
Last year Broadcom announced to plans to cut as many as 1,150 jobs to reduce costs. A third of the cuts were among workers gained from its acquisition of a Renesas Electronics Corp. business unit.
Separately, Broadcom reiterated its revenue forecast for the quarter ending June 30. Second-quarter revenue will be $2 billion to $2.1 billion, Broadcom said. Analysts on average predicted revenue of $2.05 billion, according to data compiled by Bloomberg.
