IRVINE (dpa-AFX) - Chip maker Broadcom Corp. (BRCM), Tuesday said its third-quarter profit dropped from a year ago, despite an 8 percent growth in revenues as operating costs increased. Adjusted for one-time items, earnings for the quarter increased from last year with both earnings and revenues coming in ahead of estimates.
Nevertheless, the company detailed a weak revenue guidance for the fourth quarter, due mainly to 'challenging market conditions.'
Broadcom's revenues for the quarter grew 8.7 percent driven mainly by the strong demand for its chips used in smartphones, computers and network equipments. Broadcom's main customers are Apple Inc. (AAPL) and Samsung.
Broadcom's revenues grew to $2.13 billion from $1.96 billion last year. Analysts polled by Thomson Reuters expected revenues of $2.09 billion for the quarter.
Chief Executive Scott McGregor said, 'Broadcom delivered record quarterly revenue and operating cash flow in Q3 driven by strength across all of our business segments. We also achieved key company milestones including our first quarter above $2 billion in revenue and our first quarter of Mobile and Wireless revenue above $1 billion.'
Sales growth for the quarter was offset by lower product gross margin of 48.8 percent, as compared to 49.5 percent last year. Total operating costs rose to $1.92 billion from $1.69 billion last year.
Irvine, California-based Broadcom's third-quarter profit dropped to $220 million or $0.38 per share from $270 million or $0.48 per share last year.
Excluding one-time items, net income for the third quarter improved to $476 million or $0.79 per share from $473 million or $0.81 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.76 per share for the quarter. Analysts' estimates typically exclude special items.
Among other special items, third-quarter amortization of intangible assets rose to $94 million from $29 million last year, and impairment of assets increased to $48 million from $9 million last year.
Looking forward to the fourth quarter, Broadcom expects revenues of $1.95 billion to $2.10 billion. Analysts currently expect revenues of $2.11 billion for the fourth quarter.
McGregor said, 'Despite challenging market conditions, Broadcom's product pipeline is stronger than ever, positioning us for continued success in the communications semiconductor space.'
BRCM closed Tuesday's trading at $33.36, down $0.06 or 0.18%, on a volume of 9.5 million shares on the Nasdaq. In after hours, the stock gained $0.14 or 0.42%.
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