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Broadcom shares gain after profit beats expectations

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Bloomberg News

Shares of Broadcom Corp. rose after the Irvine maker of communications chips reported earnings that beat analysts’ estimates and gave a forecast that eased concern that orders might be drying up.

The stock climbed $2.04, or 5.5%, to $39.37 on Wednesday, the day after the company announced third-quarter earnings. Broadcom also said revenue in the current period would be $2 billion to $2.15 billion, compared with an average estimate of $2.11 billion, according to data compiled by Bloomberg.

Orders for chips that connect devices — such as Apple Inc.’s iPhone and iPad — to Bluetooth and Wi-Fi networks helped boost revenue in the third quarter, the company said. Demand for set-top box components helped the company defy projections that Broadcom would be hurt by falling demand from Samsung Electronics Co. and customers in China, said Doug Freedman, an analyst at RBC Capital Markets.

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“People were really afraid of a miss,” said Freedman. “Their beat in the quarter was impressive. There was no sign of anything going any worse than expected.”

Broadcom’s orders from Apple for the latest version of its iPhone helped make up for weaker demand from Samsung, which has lost market share, Freedman said.

Third-quarter net income was $98 million, or 16 cents a share, compared with $316 million, or 55 cents, a year earlier. Excluding certain charges, profit was 91 cents, topping an average analyst estimate of 84 cents.

Revenue rose to $2.26 billion, Broadcom said, compared with an average analyst prediction of $2.18 billion.

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