Broadcom revenue, earnings beat estimates : US Business

By Sinead Carew

NEW YORK (Reuters) - Broadcom Corp , which makes chips for mobile phones, network equipment and consumer electronics, said on Tuesday its quarterly profit and revenue beat expectations.

But the company's shares fell almost 10 percent in late trading after it said on a call with analysts that third- quarter profit margins would fall from the second quarter as expenses rise, even as it issued a revenue forecast that was higher than estimates.

Broadcom cited strong demand in wireless and wireline communications chips for the stronger than expected second- quarter revenue.

One analyst said the company is likely benefiting from the increasing value of the chips it sells to Apple Inc for its latest iPhone and from strength in demand for equipment for Verizon Communications Inc's Fios video service.

"It was clearly a blowout quarter," said Piper Jaffray analyst Gary Mobley about Broadcom's top and bottom line.

Net profit rose to $134.8 million, or 25 cents a share, from $34.3 million, or 6 cents a share, a year ago.

Excluding items such as stock based compensation and impairment and amortization, Broadcom would have earned 50 cents per share compared with average analyst estimates of 35 cents a share, according to Reuters Estimates.

But as expense rise due to new product sales, Broadcom executives told analysts on a conference call that gross margins would go back to typical levels in the third quarter after second-quarter margins were a point ahead of the historical range of about 49 percent to 51 percent.

In the second quarter, revenue rose 33 percent $1.2 billion, well above Broadcom's April forecast for second- quarter revenue of $1.075 billion to $1.125 billion.

On average, analysts had expected revenue of $1.102 billion, according to Reuters Estimates.

It said during the conference call that third-quarter revenue would grow to a range of $1.25 billion to $1.3 billion. Analysts had been expecting an average third-quarter revenue of $1.155 billion, according to Reuters Estimates.

"Despite continued economic turmoil, demand for Broadcom's wired and wireless communications products strengthened in the second quarter," Chief Executive Scott McGregor said in a statement.

Its report came a day after Texas Instruments Inc posted weaker-than-expected earnings and revenue and issued a disappointing forecast for the current quarter.

Broadcom shares dropped 9.8 percent to $24.92 after the comment on margins, giving back a share price increase of 3.5 percent right after it reported its results. Broadcom closed at $27.64 in regular Nasdaq trading on Tuesday.

(Reporting by Sinead Carew; editing by Jeffrey Benkoe, Andre Grenon and Gunna Dickson)

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