Broadcom back after baseband drop

broadcom_chipWireless chip maker Broadcom reported higher-than-expected quarterly revenue and profit, thanks to sales of its Wi-Fi and broadband chips.

Broadcom has the advantage that its chips are in both the Apple’s iPhone 6, which was launched in September and Samsung’s Galaxy S6, launched in April, both of which did well.

Broadcom is exiting its baseband chips business after falling behind Qualcomm in the development of 4G technology increasingly used by carriers.

While the move freed up resources, it also raised concerns of competitive disadvantage due to the lack of a 4G product.

The stronger-than-expected forecast allayed some of those concerns as the baseband exit is expected to help the company focus more on its better-performing networking and broadband businesses.

Broadcom forecast revenue of $2.10 billion, plus or minus $75 million, for the second quarter ending June 30. Analysts on average were expecting $2.07 billion.

Broadcom also said it took a restructuring charge of $159 million, as of March 31, related to its exit from the baseband business.

The contribution of the baseband business to Broadcom’s total revenue fell to four percent in 2014 from 8 percent in 2013.

Broadcom’s net profit rose to $209 million in the first quarter ended March 31 from $165 million, a year earlier.

Revenue rose about 4 percent to $2.06 billion. Wall Street had had expected earnings a revenue of $2.01 billion.