Sales at the business, which fetches almost half of the company's revenue, fell 15 percent to $846 million in the first quarter ended March 31.
Broadcom said it expected to save $600 million in research and development and administrative costs annually by exiting the baseband business, excluding an estimated $100 million reduction in stock-based compensation.
The company had reported total operating costs and expenses of $1.88 billion for last year.
Broadcom said it now expects both GAAP and non-GAAP product gross margins to be at or above the high end its forecast.
The company had estimated in April that non-GAAP product gross margin would rise by 75 to 175 basis points for the second quarter ending June 30 from the first quarter's 52.2 percent.
Some analysts said finding a buyer for the baseband business may be difficult.
"Those that want to be in the business are already there and are more successful than Broadcom," Ascendiant's Acree said. "Intel Corp. may be a possible acquirer but it has similar intellectual property."
Broadcom's technological roadmap had fallen behind peers like Qualcomm, MediaTek, and Marvell Technology Group, FBR's Rolland said.
Irvine, California-based Broadcom's shares were up 9.6 percent at $34.92 on the Nasdaq, making them one of the top percentage gainers on Monday.