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July 26, 2011, 9:07 AM EDT
By Ian King
(Updates with early U.S. trading in fifth paragraph.)
July 26 (Bloomberg) -- Broadcom Corp. rose in German trading after the supplier of communications chips for Apple Inc.’s mobile devices forecast third-quarter sales that topped analysts’ estimates on surging demand for the iPhone and iPad.
Third-quarter sales will be $1.9 billion to $2 billion, the Irvine, California-based company said in a statement yesterday. Analysts on average estimated sales of $1.93 billion, according to a Bloomberg survey.
Broadcom makes wireless radio chips that help Apple’s smartphones and tablets connect over Wi-Fi and Bluetooth signals. Apple said last week it sold 20.3 million iPhones and 9.3 million iPads in the quarter that ended in June, topping analysts’ predictions. Broadcom also makes chips for computer and telecommunications networking equipment.
“Apple is a meaningful customer,” said Ambrish Srivastava, an analyst at BMO Capital Markets in San Francisco. “Networking and infrastructure should be recovering as well. That’s their least appreciated business by investors.”
The stock surged as much as 9 percent to $38.04 in early trading after closing at $34.91 on the Nasdaq Stock Market yesterday. The shares had dropped 20 percent this year before today.
Demand from Apple helped counter slower demand from Finnish handset maker Nokia Oyj, which Broadcom supplies with longer- range cellular radio chips, according to Srivastava, who recommends buying the shares and said he doesn’t own the stock.
Orders
Orders from makers of cable and satellite set-top boxes have also been weak as manufacturers worked through stockpiles of unsold chips, the company said on a conference call yesterday.
Second-quarter net income fell to $175 million, or 31 cents a share, from $278 million, or 52 cents, a year earlier, the company said. Sales in the second quarter rose 12 percent to $1.8 billion. Analysts projected Broadcom would have net income of 40 cents a share on sales of $1.81 billion, the average estimates in a Bloomberg survey.
Broadcom’s third-quarter gross margin, or the percentage of revenue left after subtracting production costs, will be unchanged to “up slightly” from the second quarter’s 49.6 percent, the company said.
“We’re certainly seeing our markets rebound nicely to give us the guidance that we do have,” Chief Executive Officer Scott McGregor said on the conference call. “Broadcom has very strong products right now, and we do see an opportunity to grow our market.”
--With assistance from Olga Kharif in Portland, Oregon. Editors: Jillian Ward, Simon Thiel.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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(Updates with early U.S. trading in fifth paragraph.)
July 26 (Bloomberg) -- Broadcom Corp. rose in German trading after the supplier of communications chips for Apple Inc.’s mobile devices forecast third-quarter sales that topped analysts’ estimates on surging demand for the iPhone and iPad.
Third-quarter sales will be $1.9 billion to $2 billion, the Irvine, California-based company said in a statement yesterday. Analysts on average estimated sales of $1.93 billion, according to a Bloomberg survey.
Broadcom makes wireless radio chips that help Apple’s smartphones and tablets connect over Wi-Fi and Bluetooth signals. Apple said last week it sold 20.3 million iPhones and 9.3 million iPads in the quarter that ended in June, topping analysts’ predictions. Broadcom also makes chips for computer and telecommunications networking equipment.
“Apple is a meaningful customer,” said Ambrish Srivastava, an analyst at BMO Capital Markets in San Francisco. “Networking and infrastructure should be recovering as well. That’s their least appreciated business by investors.”
The stock surged as much as 9 percent to $38.04 in early trading after closing at $34.91 on the Nasdaq Stock Market yesterday. The shares had dropped 20 percent this year before today.
Demand from Apple helped counter slower demand from Finnish handset maker Nokia Oyj, which Broadcom supplies with longer- range cellular radio chips, according to Srivastava, who recommends buying the shares and said he doesn’t own the stock.
Orders
Orders from makers of cable and satellite set-top boxes have also been weak as manufacturers worked through stockpiles of unsold chips, the company said on a conference call yesterday.
Second-quarter net income fell to $175 million, or 31 cents a share, from $278 million, or 52 cents, a year earlier, the company said. Sales in the second quarter rose 12 percent to $1.8 billion. Analysts projected Broadcom would have net income of 40 cents a share on sales of $1.81 billion, the average estimates in a Bloomberg survey.
Broadcom’s third-quarter gross margin, or the percentage of revenue left after subtracting production costs, will be unchanged to “up slightly” from the second quarter’s 49.6 percent, the company said.
“We’re certainly seeing our markets rebound nicely to give us the guidance that we do have,” Chief Executive Officer Scott McGregor said on the conference call. “Broadcom has very strong products right now, and we do see an opportunity to grow our market.”
--With assistance from Olga Kharif in Portland, Oregon. Editors: Jillian Ward, Simon Thiel.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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