Avago Profit Jumps 40%

(RTTNews) - Singapore-based chip maker Avago Technologies Ltd. (AVGO) said Thursday after the markets closed that its second quarter profit jumped 40% from last year, as revenue surged and margins improved.

The company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue. At the same time, the company forecast third quarter revenue above analysts' current consensus estimate.

"In the second fiscal quarter of the year, our wireless business came in significantly above our expectations due to strong product ramps for our FBAR-related products into multiple Asian Smartphone OEMs. We also saw a resurgence in Industrial re-sales through our distributors, especially in Europe and Japan," said Hock Tan, President and CEO of Avago Technologies.

Avago shares are currently gaining 1.57% in after hours trading after closing the day's regular trading session at $70.79, up 69 cents. The stock trades in a 52-week range of $35.62 to $71.28.

The company's gross margin for the quarter improved to 51% from 48% a year earlier, while adjusted gross margin increased to 54% from 51% last year.

For the second quarter ended May 4, 2014, the company reported net income of $158 million or $0.61 per share, compare to $113 million or $0.45 per share for the year-ago quarter.

Excluding items, adjusted net income for the second quarter was $223 million or $0.85 per share, compared to $153 million or $0.61 per share in the prior year quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.76 per share for the second quarter. Analysts' estimates typically exclude special items.

Net revenue for the second quarter rose 25% to $701 million from $562 million a year ago. Twenty-one analysts had a consensus revenue estimate of $678.54 million for the second quarter.

Looking forward, the company forecasts third quarter revenue to be in a range of $1.3 billion to $1.4 billion. Analysts currently expect the company to post revenue of $1.24 billion for the third quarter.

Gross margin for the third quarter is expected to be 24.0% plus/minus 1%, while adjusted gross margin for the quarter is expected to be 55.0% plus/minus 1%.

"The third quarter marks a transformative event in Avago's history as we completed the acquisition of LSI, creating a substantially larger company with a much more diversified and balanced mix of end markets," said Hock Tan.

Avago completed its $6.6 billion acquisition of semiconductor company LSI Corp. on May 6.