IRVINE (dpa-AFX) - Broadcom Corp. (BRCM), a semiconductor solutions provider for wired and wireless communications, said Tuesday its profit for the first quarter fell sharply from last year as lower margins offset a modest increase in revenue. Nonetheless, both earnings and sales for the quarter topped Street estimates.
Moving forward, Broadcom has provided its second-quarter revenue outlook, the midpoint of which is indicated to miss current Street estimates. The company also warned of weak margins compared to the first quarter 2012.
Broadcom shares are currently down 1.2 percent in after-hours trade on the Nasdaq.
Broadcom, which makes chips used in smartphones and network equipment, said its first-quarter 2012 product gross margin dropped to 48.1 percent from 49 percent last year. The company also incurred higher research costs at $546 million, compared to $498 million last year, as well as one-time settlement expenses of $86 million.
Irvine, California-based Broadcom reported first-quarter net income of $88 million or $0.15 per share, compared to $228 million or $0.40 per share last year.
Excluding items, adjusted earnings for the quarter were $387 million or $0.65 per share, compared to $407 million or $0.68 per share a year ago.
On average, 18 analysts polled by Thomson Reuters expected earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
Broadcom reported first-quarter revenue of $1.827 billion, compared to $1.816 billion last year. Twenty-one analysts expected revenues of $1.80 billion for the quarter.
Product revenue rose to $1.77 billion from $1.75 billion last year, while income from a Qualcomm agreement was unchanged at $52 million.
'Broadcom performed well in the first quarter, with revenue near the high end of the guided range and better-than-expected underlying profitability,' said CEO Scott McGregor
'We closed the NetLogic Microsystems transaction to expand our footprint in network infrastructure, extended our lead in 5G WiFi by beginning commercial shipments, and rounded out our PON portfolio with the acquisition of BroadLight to enable complete solutions for the fastest growing segment in broadband access,' McGregor added.
Broadcom expects second-quarter 2012 revenue of $1.9 billion to $2.0 billion. Analysts currently estimate revenue of $1.97 billion for the quarter.
Broadcom anticipates gross margin for the period to be down from the first quarter 2012 due to acquisition costs.
Among others in the industry, Broadcom's larger rival Texas Instruments Inc. (TXN) last month reported a 60 percent plunge in first-quarter earnings, hurt by weaker demand, costs associated the company's acquisition of smaller rival National Semiconductor Corp. and restructuring charges.
BRCM closed Tuesday at $36.71, up $0.11 or 0.29%, on a volume of over 14.8 million shares on the Nasdaq. In after hours, the stock lost $0.44 or 1.19%. In the past year, the stock has trended between $27.59 and $39.66.
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