SINGAPUR (dpa-AFX) - Singapore-based analog chip maker Avago Technologies Ltd. (AVGO), said Tuesday its third-quarter profit dropped from last year as lower gross margin and higher operating expenses offset a 3 percent growth in sales. Nonetheless, earnings for the quarter came in ahead of Street estimates, while revenues fell short.
Avago reported second-quarter net income of $134 million, compared to $135 million last year. On a per share basis, earnings remained flat with last year at $0.54.
Excluding items, adjusted earnings for the quarter were $168 million or $0.66 per share, compared to $165 million or $0.64 per share in the prior year.
On average, 7 analysts polled by Thomson Reuters expected earnings of $0.59 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter were $577 million, compared to $560 million a year ago. Analysts estimated revenues of $577.67 million for the quarter.
Wireless Communications revenues, which accounts for 44 percent of business, grew 26 percent from last year, and Wired Infrastructure was up 5 percent. Industrial & Automotive revenues slid 26 percent year-over-year.
'During the second fiscal quarter, continued strength in wireless and a recovery in Asia for industrial enabled us to drive growth,' said CEO Hock Tan.
Gross margin meanwhile slid to 48.2 to percent from 49.1 percent last year.
Avago said its Board during the second quarter authorized the repurchase of up to 15 million of its ordinary shares. The company also repurchased and canceled $6 million of ordinary shares during the period.
Moving forward, Avago expects third-quarter sales to improve 3 to 6 percent sequentially.
The company, however, cautioned that product transitions are likely to dampen wireless revenue growth, but said this would be offset by a recovery in industrial worldwide that should help overall gross margins.
AVGO closed Tuesday at $31.27, up $0.36 or 1.16% on a volume of 2.8 million shares on the Nasdaq. In after hours, the stock gained $1.11 or 3.55%.
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