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Broadcom to exit cellular baseband business

2014-06-02 15:41:00| Telecompaper Headlines

(Telecompaper) Broadcom said it's considering selling or shutting down its cellular baseband business. The company hired JP Morgan to help it consider options. The company did not give a reason for exiting the business. In its Q1 2014 report, Broadcom blamed the operating loss at its Mobile & Wireless division on a substantial increase in R&D costs for developing cellular baseband products. Amid a "lengthy product development and sales cycle for LTE products", the company said it was still incurring more costs than revenue for the products. Broadcom said ending the baseband business would save it around USD 700 million a year in R&D, SG&A and associated stock option costs, not including any costs for impairment or restructuring if it closes the business. The savings will be invested at an estimated rate of USD 50 million a year in developing its broadband, infrastructure and connectivity businesses. Broadcom expects the extra investment will strengthen and accelerate the company's plans in the area of small cells, embedded processing and low-power connectivity. The company also updated its outlook for second-quarter results. Revenues are still estimated at USD 2.0-2.1 billion, but the gross margin will be at the high end of above its earlier provided range, thanks to a better product mix. 

Tags: business exit cellular broadcom

Category:Telecommunications

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