Communications chip maker Broadcom posted strong Q3 2013 results but the company's share slipped at its weak future outlook.
Broadcom leads the market for chips that offers short-distance wireless connections in devices such as iPhone and iPad. However, the company's struggle to roll out new cellular technologies has affected its capability to get more orders from smartphone vendors. The company lacks LTE chip making technology, which is a key reason that its customers are diverted to rivals.
On Tuesday, October 22, the company reported that its net income for Q3 2013 rose 44 percent to $316 million, or 55 cents a share. In Q3 2012, the company reported a new income of $220 million, or 38 cents a share. Broadcom confirmed that sales for the quarter were $2.15 billion and earnings amounted to 76 cents per share. However, analysts had predicted earnings of 68 cents on sales of $2.13 billion.
"Broadcom delivered better-than-expected results across the board in the September quarter," said Scott McGregor, Broadcom's President and Chief Executive Officer. "With the Renesas transaction closed, the combined team is working diligently to deliver LTE revenue in early 2014. Looking forward, we are taking the necessary steps to tightly manage the business while focusing on strategic initiatives, including LTE, data center innovation and driving the next generation of home video with HEVC."
The company also announced that the increase in net income for Q3 2013 was a result of lower operating costs coupled with a one-time gain associated with a settlement. The company also pointed out that restructuring within the company, which reduced the workforce by 1,150 in Q3 2013 aided in bringing down the operating costs.
However, the company's weak outlook for Q4 2013 may have disappointed investors. The company announced at the earnings call that revenue for Q4 2013 is expected to be $1.975 billion, plus or minus three percent. Analysts predicted higher revenue of $2.135 billion for the final quarter of this year.
The company also plans to invest $20 million as re-structuring cost in Q4 2013, when compared to $12 million in Q3 2013.
Broadcom shares slid by5.12 percent in extended trading and closed at $27.14 on Tuesday.