Broadcom Corp said on Tuesday it is winding down its money-losing cellular baseband chip business and cutting one-fifth of its total workforce, instead of selling the unit. Chief Executive Scott McGregor told analysts on a conference call that after Broadcom said in early June it would exit baseband and then tested the market for a possible sale, the company decided to shut it down.
Broadcom said it has cut 250 sales and administrative jobs and expects to reduce worldwide headcount by another 2,250 employees. Those jobs are equivalent to about 20 percent of the 12,550 employees Broadcom cited in its 2013 annual report. Earlier on Tuesday, Broadcom reported stronger-than-expected adjusted second-quarter earnings and gave a third-quarter gross margin forecast that pushed the chipmaker's stock higher. Broadcom forecast an adjusted gross margin of 55 percent for the third quarter, higher than the 53 percent expected by Wall Street. Broadcom reported second-quarter revenue of $2.04 billion, down 2.3 percent from the year-ago period. It said revenue in the third quarter would be between $2.10 billion and $2.25 billion. The midpoint of its forecast is $2.175 billion.