Shares of Broadcom BRCM shot higher Monday morning after the company said it is considering strategic options for its cellular baseband business. More importantly, Broadcom announced guidance for the current quarter.
Broadcom was not candid in stating that strategic options include the sale or winding down of the business.
Closing the baseband business will save an estimated $700 million in R&D and SG&A expenses. Because roughly $100 million of this relates to stock based compensation, the non GAAP savings will be approximately $600 million. According to Broadcom, the sale will help the company develop small cell and low power connectivity with a $50 million dollar increase in spending.
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Guidance for the upcoming quarter was also announced. Broadcom still sees revenue ranging from $2 billion to $2.1 billion for the quarter ended June 30. Gross margins are expected to be at the top end or above the previously guided range.
Shares of Broadcom were last trading up 12.02 percent to $35.70 in premarket trading.
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