Avago turns in $344 million quarterly profit

Avago Technologies, which earlier in the day announced the $37 billion acquisition of rival chipmaker Broadcom, reported quarterly net income of $344 million on Thursday.

The financial results covered the company’s second fiscal quarter ending May 3.

Avago, which employs about 1,300 people in Fort Collins and has a Longmont office as well, also reported $1.6 billion in revenue, down slightly from the previous quarter but up 130 percent over a year earlier thanks in large part to the acquisitions of LSI Corp. and PLX Technology.

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The net income came out to $1.21 per diluted share, down 5 cents from a quarter earlier but up from 61 cents a year earlier.

Avago reported its earnings after markets closed Thursday. The company, whose share price has doubled since October, saw its shares close at $142.38, up 89 cents from Wednesday’s close. The company finished its second quarter with $2.5 billion cash on hand.

Avago is buying Irvine, Calif.-based Broadcom, which also has a Fort Collins office, in a cash and stock deal worth about $37 billion.

The deal, announced Thursday morning, comes at a time when technology stocks are booming and the companies that make the guts for tablets and smartphones are looking for ways to grow aggressively.

Avago says the deal will give it the most diversified communications platform in the chip industry. The combined company will be worth $77 billion and is expected to post annual revenue of $15 billion.

Avago will pay $17 billion in cash, along with the equivalent of about 140 million Avago shares, which were worth about $20 billion when the markets closed Wednesday.

Broadcom shareholders will be able to trade each of their current shares for either a cash payment of $54.50, or 0.4378 shares of the new company’s stock. When the deal closes, Broadcom shareholders will own about 32 percent of the combined company.

Broadcom Corp.’s chips are used in smartphones, tablets and other devices. In July the company said it would shut down its baseband unit, which made chips that control communication functions in mobile devices. The company eliminated about 2,500 jobs in the process, saying it wanted to focus on the broadband, connectivity and infrastructure markets.

It’s the latest and largest in a series of deals for Avago. A year ago Avago Technologies Ltd. brought LSI Corp. for $6.6 billion. The move was intended to strengthen Avago’s position in the enterprise storage market and broaden its offerings. It later sold LSI’s networking business to Intel Corp. for $650 million. Earlier this month Avago bought data and networking equipment maker Emulex for $606 million.

Avago, which is based in both Singapore and San Jose, California, reported $4.27 billion in revenue in its latest fiscal year, which ended in November. Broadcom had $8.43 billion in revenue in 2014.

Broadcom shares are up 89 percent in the last year.

Avago says it plans to fund the cash portion of the deal with a combination of cash and $9 billion in new debt. The deal, which has been approved by the boards of both companies, is expected to close in the first calendar quarter of 2016.

The Associated Press contributed to this report.