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Broadcom (BRCM) Drops Amid Lower Q1 Earnings

 May 01, 2012 05:18 PM

(By Balaseshan) Broadcom Corp. (NASDAQ: BRCM), a maker of chips for products ranging from cellphones to network equipment, reported a decline in first quarter earnings due to higher acquisition related charges. Despite adjusted earnings and revenue exceeding Street's expectations, its shares fell 0.97% in aftermarket.

Earnings for the first quarter were $88 million or $0.15 per share, down from $228 million or $0.40 per share last year. Adjusted earnings declined to $387 million or $0.65 per share from $407 million or $0.68 per share.

Revenue increased to $1.827 billion from $1.816 billion. Analysts had expected a profit of $0.54 per share on revenue of $1.80 billion.

[Related -Broadcom Corporation (NASDAQ:BRCM): Solid Core Biz, LTE Progress Could Aid 2014 Results]

Product revenue rose to $1.77 billion from $1.75 billion, while licensing revenue fell to $5 million from $12 million. Income from Qualcomm (NASDAQ:QCOM) Agreement remained unchanged from last year's $52 million.

Revenue from Broadband Communications declined to $494 million from $490 million, while revenue from Mobile & Wireless rose to $875 million from $854 million driven by 3G baseband and Wi-Fi combos. Infrastructure & Networking revenue fell to $406 million from $419 million, while other revenue decreased to $52 million from $53 million.

Gross margin declined to 48.1% from 49.0%, due to about $45 million increase in acquisition-related charges. Adjusted gross margin increased to 52.0% from 50.5%, driven by favorable product costs and lower E&O.

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Looking ahead into the second quarter, the company expects revenue of about $1.9 billion to $2.0 billion, while Street predicts $1.97 billion. Gross margin is expected to be down from last quarter due to anticipated sequential increase in acquisition-related charges, while adjusted gross margin is predicted to be roughly flat from last quarter.

The company anticipates research & development and selling, general, and administrative expenses of about $30 million to $45 million for the second quarter, and adjusted research & development and selling, general, and administrative expenses of $35 million to $50 million.

BRCM closed Tuesday's regular session up 0.29% at $36.71. The stock has been trading between $27.59 and $39.66 for the past 52 weeks.

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