![](http://investorshub.advfn.com/images/default_ih_profile2_4848.jpg?cb=0)
Monday, June 02, 2014 1:14:44 PM
-----------------
* Co says exiting unit to save $700 mln annually
* Shares rise as much as 13 pct
(Adds analyst comment, details from conference call)
By Lehar Maan and Soham Chatterjee
June 2 (Reuters) - Chipmaker Broadcom Corp said it was looking to exit its cellular baseband business, and forecast current-quarter margins to beat or be at the high end of its estimate.
The company's shares rose as much as 13 percent on Monday.
The cost-intensive cellular baseband business has been losing market share and has weighed on Broadcom's margins.
The business was "significantly unprofitable," FBR Capital Markets analyst Christopher Rolland said.
Broadcom on Monday said it would sell or wind down the business as soon as it could, saving some $700 million annually. [ID:nPn9NTHY9]
"It's overdue, but definitely good news," Ascendiant Capital Markets analyst Cody Acree said.
"We have said in 2014 wireless was make or break for Broadcom - either they share some proven success or get out of the business, or it probably cost the CEO his job."
Broadcom's chips integrating Wi-Fi and Bluetooth technology are used in Apple Inc's iPhone and other top-tier smartphones and tablets.
But its chips for low-cost smartphones have lost market share to MediaTek Inc . In the 4G long-term evolution (LTE) chip market, the company has been battling Qualcomm Inc's domination.
Stiff competition has already forced big names such as Texas Instruments Inc , STMicroelectronics NV and Ericsson out of the cellular baseband chip business.
Broadcom, which has been spending on baseband technology research and development, has seen operating profits fall at its mobile and wireless business.
Sales at the business, which fetches almost half of the company's revenue, fell 15 percent to $846 million in the first quarter ended March 31.
Broadcom said it expected to save $600 million in research and development and administrative costs annually by exiting the
baseband business, excluding an estimated $100 million reduction in stock-based compensation.
The company had reported total operating costs and expenses of $1.88 billion for last year.
Broadcom said it now expects both GAAP and non-GAAP product gross margins to be at or above the high end its forecast.
The company had estimated in April that non-GAAP product gross margin would rise by 75-175 basis points for the second quarter ending June 30 from the first quarter's 52.2 percent.
Some analysts said finding a buyer for the baseband business may be difficult.
"Those that want to be in the business are already there and are more successful than Broadcom," Ascendiant's Acree said.
"Intel Corp may be a possible acquirer but it has similar intellectual property."
Broadcom's technological roadmap had fallen behind peers like Qualcomm, MediaTek and Marvell Technology Group Ltd , FBR's Rolland said.
Recent INTC News
- Intel Corporation Incorporated Sued for Securities Law Violations - Contact the DJS Law Group to Discuss Your Rights - INTC • PR Newswire (US) • 07/01/2024 07:25:00 PM
- Intel Corporation Sued for Securities Law Violations - Investors Should Contact The Gross Law Firm for More Information - INTC • PR Newswire (US) • 06/28/2024 09:45:00 AM
- Intel Demonstrates First Fully Integrated Optical I/O Chiplet • Business Wire • 06/26/2024 03:00:00 PM
- Class Action Filed Against Intel Corporation (INTC) - July 2, 2024 Deadline to Join - Contact The Gross Law Firm • PR Newswire (US) • 06/25/2024 09:45:00 AM
- Intel Corporation Sued for Securities Law Violations - Investors Should Contact The Gross Law Firm for More Information - INTC • PR Newswire (US) • 06/20/2024 09:50:00 AM
- Intel Corporation Securities Fraud Class Action Lawsuit Pending: Contact The Gross Law Firm Before July 2, 2024 to Discuss Your Rights - INTC • PR Newswire (US) • 06/17/2024 09:45:00 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/14/2024 09:17:08 PM
- Form 11-K - Annual report of employee stock purchase, savings and similar plans • Edgar (US Regulatory) • 06/13/2024 09:11:27 PM
- FDA Panel Supports Eli Lilly’s Donanemab, Rio Tinto Expands Stake in Boyne Smelters, and More News • IH Market News • 06/11/2024 11:11:40 AM
- July 2, 2024 Deadline: Contact The Gross Law Firm to Join Class Action Suit Against INTC • PR Newswire (US) • 06/10/2024 09:45:00 AM
- Apollo Buys 49% of Intel’s Irish Plant for $11bn, BlackRock and Citadel to Create Texas Exchange, and More News • IH Market News • 06/05/2024 11:41:36 AM
- Class Action Filed Against Intel Corporation (INTC) - July 2, 2024 Deadline to Join - Contact The Gross Law Firm • PR Newswire (US) • 06/05/2024 09:45:00 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/04/2024 08:07:51 PM
- Intel and Apollo Agree to Joint Venture Related to Intel’s Fab 34 in Ireland • Business Wire • 06/04/2024 08:05:00 PM
- Intel Accelerates AI Everywhere at Computex 2024; Redefines Compute Power, Performance and Affordability with new Xeon 6, Gaudi Accelerators and Lunar Lake Architecture to Grow AI PC Leadership • Business Wire • 06/04/2024 03:00:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 08:42:58 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 08:40:51 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 08:39:15 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 08:37:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 08:35:10 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 08:31:04 PM
- Intel Corporation to Participate in Upcoming Investor Conferences • Business Wire • 05/16/2024 08:30:00 PM
- Walmart Corporate Job Cuts and Office Centralization, GameStop and AMC Surge, and More News • IH Market News • 05/14/2024 11:26:02 AM
- Kevin O’Buckley to Lead Foundry Services at Intel • Business Wire • 05/13/2024 02:15:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/10/2024 08:26:31 PM
FEATURED Freedom Holdings Corporate Update; Announces Management Has Signed Letter of Intent • Jul 3, 2024 9:00 AM
EWRC's 21 Moves Gaming Studios Moves to SONY Pictures Studios and Green Lights Development of a Third Upcoming Game • EWRC • Jul 2, 2024 8:00 AM
BNCM and DELEX Healthcare Group Announce Strategic Merger to Drive Expansion and Growth • BNCM • Jul 2, 2024 7:19 AM
NUBURU Announces Upcoming TV Interview Featuring CEO Brian Knaley on Fox Business, Bloomberg TV, and Newsmax TV as Sponsored Programming • BURU • Jul 1, 2024 1:57 PM
Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM
VAYK Exited Caribbean Investments for $320,000 Profit • VAYK • Jun 27, 2024 9:00 AM