Avago Technologies Q1 Profit Tops Estimate; To Buy Emulex

(RTTNews) - Chipmaker Avago Technologies Ltd. (AVGO) reported net income for the first quarter of $351 million or $1.26 per share, compared to $134 million or $0.53 per share for the year-ago quarter.

Income from continuing operations for the first quarter was $338 million or $1.22 per share, compared to $134 million or $0.53 per share in the prior year quarter.

Excluding items, adjusted income from continuing operations for the first quarter was $596 million or $2.09 per share, compared to $217 million or $0.84 per share in the same quarter last year.

Net revenue for the first quarter jumped 131% to $1.64 billion from $709 million a year earlier. Adjusted net revenue surged 134% to $1.66 billion from $709 million last year.

Analysts polled by Thomson Reuters expected the company to earn $1.94 per share on revenue of $1.64 billion for the first quarter. Analysts' estimates typically exclude special items.

Looking forward, the company expects second quarter revenue to be down 4% to flat with the first quarter level, adjusted reveneu to be down 3% to up 1% sequentially.

Seoarately, Avago Technologies said it has agreed to buy Emulex Corp. (ELX) in an all-cash deal valued at about $606 million, or $609 million net of cash and debt acquired.

Under the deal, which has been approved by the Boards of Directors of both companies, a subsidiary of Avago will commence a tender offer for all of the outstanding shares of Emulex common stock for $8 per share in cash. Avago expects to fund the deal with cash available on its balance sheet.

The deal is expected to close in the second half of Avago's fiscal year ending November 1, 2015.

Upon closing, the deal is expected to be immediately accretive to Avago's adjusted earnings per share.