Shares of Irvine-based communications chipmaker Broadcom Corp. continued their bullish run on Wednesday after the company gave a positive outlook for the current quarter.
The stock was up about 16% at the close of New York trading on Tuesday on a recent market value of roughly $14 billion.
In a conference call, Chief Financial Officer Eric Brandt said Broadcom is expecting “solid growth in the second quarter” and sales of $1.075 billion to $1.125 billion.
The company didn’t give a profit outlook.
Analysts are looking for profits of about $151 million on sales of $1.03 billion.
Wall Street seemed to shrug off concerns about Broadcom’s shrinking profits in the second quarter, which are expected as part of its new product launches.
“We expect to see a slight decline in gross margin driven by product mix and the ramp of a number of new products to new and existing customers in the quarter,” Brandt said.
Analysts were pleased that Broadcom is focused on reining in its expenses.
“Cost control efforts exceeded our expectations,” Daniel Berenbaum, analyst at Caris & Co. in New York, said in a note to clients. “Operating expenses now appear firmly under control.”
The rosy outlook comes on the heels of Broadcom’s first-quarter results, which beat analysts’ expectations.
First-quarter sales totaled $1 billion, up nearly 15% from a year earlier.
Including costs for stock compensation, research and development, write-downs on assets and other charges, Broadcom posted $74 million in profits, up 22% from a year earlier.
Berenbaum called the earnings report “very solid.” He has a “buy” rating on the stock.
“For now, our fear of estimate cuts has proven to be unfounded,” he said. “We still see Broadcom as a premier growth story in large-capitalization semiconductors.”
