NEW YORK (TheStreet) -- Shares of Broadcom Corp. (BRCM) are surging in pre-market trade, up 12.96 % to $36.00, after the company announced that it's exploring strategic alternatives for its cellular baseband business, including a potential sale or wind-down.
The company said it engaged JP Morgan (JPM) in connection with its efforts.
The successful sale or wind-down of the cellular baseband business is currently expected to result in a roughly $700 million reduction in annualized GAAP research and development and selling, general and administrative expenses, of which approximately $100 million relates to estimated reductions in stock-based compensation.
Broadcom said non-GAAP research and development and selling, general and administrative expenses are currently expected to be reduced by roughly $600 million.
TheStreet Ratings team rates BROADCOM CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BROADCOM CORP (BRCM) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."