Broadcom Inc.’s chief executive on Thursday defended his positive outlook that end-market demand is “solid” for the rest of the year as Wall Street analysts questioned that optimism amid a cooling of growth in the chip industry.
Broadcom
AVGO,
-1.42%
CEO Hock Tan told analysts on a post-earnings conference call that he sees “true demand” in the company’s end markets, and that takes into account weakness in consumer markets. The San Jose, Calif.-based company had forecast revenue of about $8.9 billion for the fiscal fourth quarter, while analysts have estimated revenue of $8.77 billion. That forecast received a little pushback from analysts who have seen a rocky earnings season for chip makers, where optimism is in short supply.
“Let me start by saying, while consumer IT hardware spending has been reported to be weak, very weak from our vantage point, infrastructure spend is still very much holding,” Tan said. He also addressed speculation that the appearance of strong demand could be “false,” as many customers in times of shortage will hoard chips by double- or triple-buying, creating a bubble of demand that eventually collapses.
“We put in a lot of checks and balances, hugely, before we put products out on aircraft or trucks to our customers, and we have been doing this now for two years, so we’re pretty good at doing it,” Tan told analysts.
Shares gained 2% after hours, following a 1.4% decline in the regular session to close at $492.01.
Broadcom reported fiscal third-quarter net income of $3 billion, or $7.15 a share, compared with $1.8 billion, or $4.20 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation and other items, were $9.73 a share, compared with $6.96 a share in the year-ago quarter.
Revenue rose to $8.46 billion from $6.78 billion in the year-ago quarter, as chip sales surged 32% to $6.62 billion from the year-ago period, and infrastructure software sales ticked 5% higher to $1.84 billion.
Analysts surveyed by FactSet had expected earnings of $9.56 a share on revenue of $8.41 billion, based on Broadcom’s forecast revenue of about $8.4 billion back in late May. The Street also forecast chip sales, on average, of $6.57 billion and infrastructure software sales of $1.83 billion.
In July, the company said its software head, Tom Krause, is leaving the company in the middle of the $61 billion VMware Inc.
VMW,
-1.04%
acquisition he helped bring about, to go head the private company formed from a combined Citrix Systems Inc.
CTXS,
+0.18%
and Tibco Software. Broadcom’s earnings were overshadowed last quarter by the announcement of the VMware bid. Tan was also optimistic about how that process is going along.
“We’re making good progress with our various regulatory filings around the world,” Tan told analysts. “We have an excellent team focus on these efforts, and we are moving forward very much as expected in this regard. We continue to expect the transaction to be completed in Broadcom’s fiscal-year 2023.”
Year to date, shares of Broadcom have fallen 26%. In comparison, the S&P 500 index
SPX,
+0.30%
has fallen 17%, the tech-heavy Nasdaq Composite index
COMP,
-0.26%
is down 25%, and the PHLX Semiconductor Index
SOX,
-1.92%
has dropped more than 33%.
Source: https://www.marketwatch.com/story/broadcom-results-outlook-breeze-past-wall-street-expectations-stock-ticks-higher-11662064541?siteid=yhoof2&yptr=yahoo
Broadcom CEO defends optimistic ‘true demand’ outlook as PC, smartphone sales slide
Broadcom Inc.’s chief executive on Thursday defended his positive outlook that end-market demand is “solid” for the rest of the year as Wall Street analysts questioned that optimism amid a cooling of growth in the chip industry.
Broadcom
-1.42%
AVGO,
CEO Hock Tan told analysts on a post-earnings conference call that he sees “true demand” in the company’s end markets, and that takes into account weakness in consumer markets. The San Jose, Calif.-based company had forecast revenue of about $8.9 billion for the fiscal fourth quarter, while analysts have estimated revenue of $8.77 billion. That forecast received a little pushback from analysts who have seen a rocky earnings season for chip makers, where optimism is in short supply.
“Let me start by saying, while consumer IT hardware spending has been reported to be weak, very weak from our vantage point, infrastructure spend is still very much holding,” Tan said. He also addressed speculation that the appearance of strong demand could be “false,” as many customers in times of shortage will hoard chips by double- or triple-buying, creating a bubble of demand that eventually collapses.
“We put in a lot of checks and balances, hugely, before we put products out on aircraft or trucks to our customers, and we have been doing this now for two years, so we’re pretty good at doing it,” Tan told analysts.
Shares gained 2% after hours, following a 1.4% decline in the regular session to close at $492.01.
Broadcom reported fiscal third-quarter net income of $3 billion, or $7.15 a share, compared with $1.8 billion, or $4.20 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation and other items, were $9.73 a share, compared with $6.96 a share in the year-ago quarter.
Revenue rose to $8.46 billion from $6.78 billion in the year-ago quarter, as chip sales surged 32% to $6.62 billion from the year-ago period, and infrastructure software sales ticked 5% higher to $1.84 billion.
Analysts surveyed by FactSet had expected earnings of $9.56 a share on revenue of $8.41 billion, based on Broadcom’s forecast revenue of about $8.4 billion back in late May. The Street also forecast chip sales, on average, of $6.57 billion and infrastructure software sales of $1.83 billion.
In July, the company said its software head, Tom Krause, is leaving the company in the middle of the $61 billion VMware Inc.
-1.04%
+0.18%
VMW,
acquisition he helped bring about, to go head the private company formed from a combined Citrix Systems Inc.
CTXS,
and Tibco Software. Broadcom’s earnings were overshadowed last quarter by the announcement of the VMware bid. Tan was also optimistic about how that process is going along.
“We’re making good progress with our various regulatory filings around the world,” Tan told analysts. “We have an excellent team focus on these efforts, and we are moving forward very much as expected in this regard. We continue to expect the transaction to be completed in Broadcom’s fiscal-year 2023.”
Year to date, shares of Broadcom have fallen 26%. In comparison, the S&P 500 index
+0.30%
-0.26%
-1.92%
SPX,
has fallen 17%, the tech-heavy Nasdaq Composite index
COMP,
is down 25%, and the PHLX Semiconductor Index
SOX,
has dropped more than 33%.
Source: https://www.marketwatch.com/story/broadcom-results-outlook-breeze-past-wall-street-expectations-stock-ticks-higher-11662064541?siteid=yhoof2&yptr=yahoo