Broadcom revenue forecast misses views; shares fall 5 percent
SAN FRANCISCO (Reuters) - Broadcom (BRCM.O), which faces growing competition in mobile chips, on Tuesday forecast fourth-quarter revenue that was below Wall Street expectations, sending its shares lower even as third-quarter results topped views.
Broadcom also said that during the third quarter it started a restructuring plan to reduce expenses, including cutting its workforce by up to 1,150 employees.
Related to that, the company recorded a $12 million restructuring cost in the third quarter and will record another for $20 million in the current quarter.
Worries about Broadcom's slow progress launching Long Term Evolution baseband technology as well as concerns about growing competition selling connectivity chips used in smartphones have hurt the company's stock, which has fallen 19 percent in 2013.
"They've got a wireless business where they dominate but they're under a long term competitive threat from other players," said Bernstein analyst Stacy Rasgon.
Like larger Intel, Broadcom has been slow to launch chips featuring multimode, carrier-validated LTE, or Long Term Evolution, a technology allowing fast data transfer rates in smartphones that has become widely adopted in the United States.
Last month, Broadcom said it was buying Japanese chipmaker Renesas Electronics' LTE-related assets for $164 million to speed up its launch of next-generation Long Term Evolution communications technology.
Some of Broadcom's announced layoffs relate to that acquisition.
It said revenue in the fourth quarter would dip to $1.975 billion, plus or minus 3 percent. Analysts, on average have forecast fourth-quarter revenue of $2.135 billion, according to Thomson Reuters I/B/E/S.
The Irvine, California-based chipmaker posted third-quarter revenue of $2.146 billion, compared with $2.085 billion in the year-ago quarter. Analysts, on average, expected third-quarter revenue of $2.128 billion.
Third-quarter net profit rose to $316 million, or 55 cents a share, versus $220 million, or 38 cents last year. Non-GAAP earnings per share were 76 cents, compared with analysts' estimates for 69 cents a share.
Broadcom shares were down 5.12 percent in extended trading after closing down 0.66 percent at $27.14 in regular Nasdaq trade.
(Reporting by Noel Randewich; Editing by Leslie Adler and Andrew Hay)