Broadcom Outlook for Profit Margin Disappoints

Tuesday, 01 May 2012 04:48 PM

 

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Broadcom Corp. said the profit margin for the current quarter would fall from the first quarter because of acquisition-related costs, sending its shares down in after-market trade.

Broadcom, which closed its $3.7 billion acquisition of NetLogic Microsystems during the quarter, did not say how low margins would go.

The company, a maker of chips for products ranging from cellphones to network equipment, forecast revenue of $1.9 billion to $2 billion, implying a midpoint below the $1.969 billion expected by Wall Street, according to Thomson Reuters I/B/E/S.

"They did well in the quarter but their guidance is a tad weak," said Charter Equity Research analyst Ed Snyder. ""With improving overall revenue you'd expect margins to move up a bit."

The company said first-quarter revenue rose slightly to $1.827 billion from $1.816 billion. That compared with Wall Street's estimate of $1.799 billion.

Its profit fell to $88 million, or 15 cents per share, from $228 million, or 40 cents per share, in the year-ago quarter.

Broadcom shares fell about 1 percent to $36.28 after closing at $36.70 on the Nasdaq.

© 2014 Thomson/Reuters. All rights reserved.

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