SINGAPUR (dpa-AFX) - Chipmaker Avago Technologies Ltd. (AVGO) said Tuesday that its third quarter profit rose 17% from last year, helped by strong wired-infrastructure sales and improved margins. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue.
The Singapore-based company reported net income for the third quarter of $144 million or $0.57 per share, compared to $123 million or $0.50 per share for the year-ago quarter.
Excluding items, adjusted net income for the third quarter was $176 million or $0.68 per share, compared to $152 million or $0.61 per share in the prior year quarter.
On average, 9 analysts polled by Thomson Reuters expected the company to earn $0.63 per share for the third quarter. Analysts' estimates typically exclude special items.
Gross margin for the third quarter improved to 49.3% from 47.8% a year ago, while adjusted gross margin for the quarter increased to 51.7% from 50.9% last year.
The company, which makes chips for products ranging from cell phones to computer servers, said net revenue for the third quarter rose 10% to $603 million from $550 million in the same quarter last year. Twelve analysts had a consensus revenue estimate of $594.58 million for the third quarter.
'During the third quarter of fiscal 2011, our four target markets performed as we expected and we outperformed these markets as our revenue growth for the quarter came in at the high end of guidance,' said Hock Tan, President and CEO of Avago Technologies. 'While uncertainties prevail in the global economy today, we continue to believe revenue will grow for the balance of the fiscal year due to share gains with certain wireless and wired OEMs.'
By target market, Wireless Communications revenues grew 8%, Wired Infrastructure surged 37%, Industrial & Automotive increased 5%. Consumer & Computing Peripherals forming 5% of total revenues dropped 34% from the prior year quarter.
During the third quarter, the company repurchased and cancelled about 1.9 million ordinary shares for an aggregate $68 million.
Looking forward, the company said it expects fourth quarter revenue to grow between 2% and 5% from the third quarter level, implying fourth quarter revenue of $615.06 million to $633.15 million. Analysts currently expect the company to post revenue of $623.51 million for the fourth quarter.
Gross margin for the fourth quarter is expected to be 49.0%, plus/minus 75 basis points, while adjusted gross margin for the quarter is expected to be 51.5%, plus/minus 75 basis points.
Avago shares, which have traded in a range of $18.41 to $39.45 over the past year, closed Tuesday's regular trading session at $29.26, up $1.62 or 5.86%. The stock is currently gaining $2.29 or 7.83% in after hours trading.
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