NEW YORK (Reuters) - Chip maker Broadcom Corp <BRCM.O> beat its quarterly revenue target on Tuesday, citing strength in its wireline business segments, enterprise and broadband, and it forecast revenue growth in this quarter.
By Sinead Carew
NEW YORK (Reuters) - Chip maker Broadcom Corp <BRCM.O> beat its quarterly revenue target on Tuesday, citing strength in its wireline business segments, enterprise and broadband, and it forecast revenue growth in this quarter.
Its shares rose 9 percent in late trading after the news as investors, investors particularly worried about enterprise spending in a weak economy, heaved a sigh of relief.
Broadcom, which makes chips for mobile phones, network equipment and consumer devices said revenue rose 14.5 percent to $1.03 billion.
!ADVERTISEMENT!This compared with its forecast for first-quarter revenue of between $975 million and $1.005 billion and average analyst estimates for $992.16 million, according to Reuters Estimates.
It also forecast second quarter revenue in a range of $1.075 billion to $1.125 billion, citing strength in all of its business segments. This was above average analyst estimates for $1.027 billion in revenue, according to Reuters Estimates.
Charter Equity Research analyst John Dryden said Broadcom's stronger than expected revenue was a surprise, especially as it cited strength in enterprise network equipment as this is often seen as a worrying segment in times of economic uncertainty.
"Broadcom is not seeing a slowdown in the overall economy as far as it impacts their business, which is surprising as the tone of economic uncertainty hasn't improved in the last three months," said Dryden.
Broadcom said its profit rose to $74.3 million, or 14 cents per share, from $61 million, or 10 cents a share, in the year-ago quarter.
Excluding unusual items the company's earnings per share would have been 39 cents compared with average analyst estimates of 28 cents, according to Reuters Estimates.
The company cited strong chip demand for satellite television set-top boxes and high-speed Internet modems, as well as for chips used in network equipment used by enterprises.
Broadcom Chief Executive Scott McGregor said that, while he was cautious on the macroeconomic front, the company was not seeing signs of a weak economy hurting its business.
"We are not currently seeing any broad-based weakness," McGregor said in a conference call with analysts.
Broadcom's business segments include enterprise and broadband, which it said were both stronger than expected in the quarter, as well as wireless, including cell phone chips.
McGregor said in a statement that its second-quarter outlook represents solid revenue growth in each of its three major target markets.
The report follows a disappointing outlook for the current quarter from bigger wireless chip rival Texas Instruments
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Earlier on Tuesday Broadcom said it agreed to pay $12 million to settle U.S. Securities and Exchange Commission charges that it fraudulently backdated stock options.
Broadcom shares rose to $25.70 in after hours trading after closing down 1 percent at $23.55 in regular Nasdaq trading.
(Reporting by Sinead Carew; Editing by Andre Grenon)
