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On Tuesday, California-based Broadcom slightly increased its fourth-quarter revenue outlook and raised its dividend as it abandoned the costly competition against Qualcomm when it comes to baseband cellphone chips.
The company was expected to disclose more details on how it would reimburse cash to its shareholders after its decision in June to exit the cellular baseband chip industry as it was already a money-losing business for the company.
Broadcom stated that it’s raising its 2015 quarterly dividend by 17% or 14 cents a share, disclosed through a press release. The company also disclosed a one-billion stock buyback authorization effective next year. Company shares rose over 1% in the extended trading.
Broadcom also announced its expectation of between 2.075 billion dollars and 2.150 billion dollars as fourth-quarter revenue, while analysts’ average forecast was at 2.11 billion dollars.
Up until Tuesday, the average forecast of analysts for the company’s fourth-quarter revenue was at 2.064 billion dollars based on Thomson Reuters.
Company shares rose to 34% as the Broadcom stated in June that it was planning on getting out of the baseband technology when it has fallen short in the 4G technology development that was significantly used by carriers.
Its exit from the baseband cell phone chip business has freed up resources so as to concentrate on its networking and broadband that are better-preforming than the baseband business. However, the chipmaker may be left in a competitive disadvantage marketing its Wi-Fi chips within the smartphone market without its 4G product.
Company shares rose to 1.36% in the extended trading and closed down to 2.04%.