Broadcom cuts 2,500 jobs in wind-down of baseband unit

To match interview BROADCOM
Broadcom Corporation President and Chief Executive Officer Scott McGregor gestures during a news conference in Taipei March 18, 2010. CREDIT: REUTERS/PICHI CHUANG

(Reuters) – Broadcom Corp said on Tuesday it is winding down its money-losing cellular baseband chip business and cutting one-fifth of its total workforce, instead of selling the unit.

Chief Executive Scott McGregor told analysts on a conference call that after Broadcom said in early June it would exit baseband and then tested the market for a possible sale, the company decided to shut it down.

“We made the decision to pursue a wind-down, which minimizes the ongoing losses from the business, and enables us to focus on our core strengths that much more quickly,” McGregor said.

Broadcom said it has cut 250 sales and administrative jobs and expects to reduce worldwide headcount by another 2,250 employees. Those jobs are equivalent to about 20 percent of the 12,550 employees Broadcom cited in its 2013 annual report.

Earlier on Tuesday, Broadcom reported stronger-than-expected adjusted second-quarter earnings and gave a third-quarter gross margin forecast that pushed the chipmaker’s stock higher.

Broadcom’s connectivity chips are used widely in smartphones including Apple’s iPhones. But the company lost market share in baseband chips and made slow progress in leading-edge 4G technology, which is dominated by Qualcomm Inc.

The Irvine, California company is the latest chipmaker to abandon the baseband market. Texas Instruments Inc cut 1,700 jobs in 2012 after failing to sell its mobile chip business.

Developing baseband technology to combine with its connectivity chips had been seen as Broadcom’s response to low-cost smartphone makers in China. Abandoning baseband will reduce Broadcom’s costs, but it may leave the chipmaker at a competitive disadvantage.

Broadcom forecast an adjusted gross margin of 55 percent for the third quarter, higher than the 53 percent expected by Wall Street.

“This tells me that getting out of (baseband) was the right news,” RBC analyst Doug Freedman said of Broadcom’s outlook.

Smartphone chipmakers have been adjusting as industry growth shifts away from North America toward China and other developing countries, where consumers favor handsets selling for under $200 rather than such top-tier devices as the iPhone.

Broadcom reported second-quarter revenue of $2.04 billion, down 2.3 percent from the year-ago period. It said revenue in the third quarter would be between $2.10 billion and $2.25 billion. The midpoint of its forecast is $2.175 billion. Analysts on average had expected second-quarter revenue of $2.05 billion and third-quarter revenue of $2.19 billion, according to Thomson Reuters I/B/E/S. In the second quarter, Broadcom lost $1 million, or 0 cents a share, compared with a loss of $251 million, or 43 cents a share, last year. Non-GAAP earnings per share were 65 cents in the second quarter. Analysts on average expected 61 cents.

Broadcom’s stock rose 3.23 percent in extended trading after closing up 0.31 percent at $38.75 in regular Nasdaq trade.

(Reporting by Noel Randewich; Editing by Meredith Mazzilli)
 
 
BY NOEL RANDEWICH / SAN FRANCISCO

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One Response to Broadcom cuts 2,500 jobs in wind-down of baseband unit

  1. mtlin says:

    博通結束基頻業務 裁員 2500 人

    博通執行長 麥奎格

    2014 年 07 月 23 日 20:20 蘋果即時新聞

    博通(BROADCOM)經過 1 個月的評估,決定結束手機基頻晶片業務,改變原本的出售計劃,並在全球裁員 2500 人,佔總員工數約 20%。

    博通表示,他們已裁掉 250 名銷售與管理人員,預計繼續在全球再裁員 2250 人。

    博通執行長麥奎格(Scott McGregor)表示,6 月初公司原本計劃退出基頻市場,並開始尋找潛在買家,不過在沒有合適買家的情況下,他們決定結束這項業務。

    麥奎格說:「我們決定逐步縮減規模,這將有助我們把這項業務上的損失降到最小,並讓我們得以專注於核心優勢業務,取得更快的發展。」

    博通上季稅後淨損 100 萬美元(3003.5 萬元台幣),虧損規模較去年同期的 2.51 億美元(75.4 億元台幣)大幅縮減,且樂觀預估本季毛利率為 55%,優於市場預估的 53%,激勵周二盤後股價大漲 3.23%。(賴宇萍/綜合外電報導)

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