Reuters: Global Markets: Broadcom outlook for profit margin disappoints

Reuters: Global Markets Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Broadcom outlook for profit margin disappoints May 1st 2012, 22:44 NEW YORK | Tue May 1, 2012 6:44pm EDT NEW YORK (Reuters) - Chip maker Broadcom Corp (BRCM.O) said its gross profit margin for the current quarter would drop from the first quarter because of acquisition-related costs, and its shares fell as much as 1.9 percent in after-hours trade. Broadcom's on Tuesday reported first-quarter earnings and revenue than were higher than Wall Street expected, but investors worried about rising costs at the company, which closed its $3.7 billion acquisition of NetLogic Microsystems during the quarter. The company, a maker of chips for products ranging from cellphones to network equipment, is also suffering from weak phone sales at chip customer Nokia Oyj (NOK1V.HE) and stiff competition from rival Qualcomm Inc (QCOM.O). "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." Broadcom reported a GAAP gross margin of 48.1 percent for the first quarter but did not say how far it expects the number to fall this quarter. On a non-GAAP basis, it said gross margin would stay around the first-quarter level of 52 percent. The company 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. Executives told analysts on a conference call that revenue from network equipment clients would rise this quarter but that wireless sales would be roughly unchanged from the first quarter. Broadcom's 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. Excluding unusual items, it earned 65 cents per share, well above the 55 cents estimated on average by analysts. Broadcom shares fell as far as $36 in late trade after closing at $36.70 on the Nasdaq. (Reporting by Sinead Carew; Editing by Gary Hill and Steve Orlofsky) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions