Broadcom considers sale of cellular baseband unit

Broadcom considers sale of cellular baseband unit

02 JUN 2014

Semiconductor firm Broadcom said it is assessing “strategic alternatives” for its cellular baseband business, including a sale or even winding it down entirely.

The US firm has appointed investment bank JP Morgan to advise.

A sale or wind-down of the mobile business is expected to result in a roughly $700 million reduction in Broadcom’s annualised GAAP research and development and selling, general and administrative expenses, the company said.

Of this sum, about $100 million relates to estimated reductions in stock-based compensation.

Non-GAAP research and development and selling, general and administrative expenses are currently expected to be reduced by roughly $600 million.

The vendor said these figures do not reflect the impact of a potential impairment and/or restructuring charges following any sale or wind-down.

Broadcom expects to organically reinvest $50 million of these savings on an annualised basis into projects in its broadband, infrastructure and connectivity businesses.

The business has been under scrutiny for a while. Late last year Stuart Robinson, a director at Strategy Analytics, warned in a research note: “Broadcom is still a minor player in the baseband market and cannot afford any missteps as the year 2014 is shaping up to be an important one for the company… Only a successful LTE execution in 2014 will secure the long-term outlook for Broadcom’s mobile & wireless business division.”

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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