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Broadcom's fourth-quarter results ease smartphone chip worries

By Noel Randewich

SAN FRANCISCO (Reuters) - Broadcom on Thursday posted fourth-quarter revenue and profits that were down from a year earlier, but the results slightly exceeded expectations of Wall Street analysts concerned about tepid smartphone sales.

The chipmaker reported fourth-quarter revenue of $2.06 billion, down 0.8 percent from the year-ago period. It said revenue in the first quarter would be between $1.9 billion and $2.0 billion.

While Broadcom's connectivity chips are widely used in high-end smartphones like Apple's iPhone, they are included less often in low-end handsets favored by many consumers in emerging markets, where growth in smarpthones has shifted.

Concerns about slowing smartphone sales grew on Monday when Apple gave a weak revenue forecast and reported lower-than-expected holiday iPhone sales.

"Despite Apple disappointing on some of their numbers, the supply chain seems to be exceeding expectations," RBC analyst Doug Freedman said of Broadcom's quarterly results.

To make up for the smartphone shift to emerging markets, Broadcom is launching advanced LTE baseband chips to compete with dominant player Qualcomm and is also stepping up its focus on networking in data centers.

Broadcom gets around half of its revenues from mobile, with the rest coming from network infrastructure and home products like modems and set-top boxes. Broadcom said that in the December quarter it sold more networking chips than it expected.

Chief Financial Officer Eric Brandt told analysts on a conference call that for the March quarter, he expects revenue from Broadcom's broadband and infrastructure segments to be "down slightly," and from its mobile and wireless business to be "down."

Broadcom said that in the December quarter, revenue from its mobile and wireless segment decreased 7 percent sequentially, in line with its previous expectations. Customers reducing inventories of mobile chips in the December quarter will do the same in the March quarter, the company said.

Broadcom also said it was increasing its quarterly dividend by 9 percent.

Fourth-quarter net profit for Broadcom fell to $168 million, or 29 cents a share, versus $251 million, or 43 cents last year.

Non-GAAP earnings per share were 60 cents, better than the 57 cents expected by analysts.

Analysts on average had expected fourth-quarter revenue of $2.020 billion and first-quarter revenue of $1.967 billion, according to Thomson Reuters I/B/E/S.

Following delays with technology development last year, Broadcom expects to start receiving revenue from its first LTE baseband chips in the first quarter, with Samsung Electronics as its first significant customer.

Like larger Intel, Broadcom has been slow to launch chips featuring multimode, carrier-validated LTE, or Long Term Evolution, a technology allowing fast data transfer rates in smartphones that has become widely adopted in the United States.

Adding to worries about smartphone demand, Samsung last week posted an 18 percent drop in fourth-quarter mobile profits, including weaker-than-expected sales of its Galaxy S4 high-end devices.

Broadcom shares were up 0.48 percent in extended trading after closing up 1.81 percent at $29.21 in regular Nasdaq trade.

(Reporting by Noel Randewich; Editing by Leslie Adler and Mohammad Zargham)

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