Benefitting from the growing demand for data center products, Broadcom’s (AVGO) earnings rose sharply in the third quarter and exceeded estimates. The impressive results triggered a stock rally and shares of the chipmaker gained about 3% following the announcement.
Adjusted profit, excluding the impact of one-off items, advanced to $2.26 billion or $4.98 per share from $1.87 billion or $4.10 per share in the year-ago quarter and far exceeded analysts’ forecast. Net income attributable to common shareholders was $1.20 billion or $2.71 per share, higher than $0.51 billion or $1.14 per share reported last year.
There was a 13% annual growth in net revenues to $5.06 billion during the three-month period. The uptick was driven by a 70% surge in revenues of the Enterprise Storage division which mainly consists of the company’s fast-growing datacenter business. Among the other segments, Wired Infrastructure registered a 4% rise, while the Wireless Communications division remained flat. The top line was in line with expectations.
The impressive results triggered a stock rally and shares of the chipmaker gained about 3% following the announcement
“Datacenter demand is driving strong growth in more than 50% of our consolidated revenue. Through the strength of our franchise business model, we delivered another quarter of sustained revenues and strong free cash flows,” said CEO Hock Tan.
During the quarter, the company repurchased 24 million shares for about $5.38 billion. It also declared a quarterly cash dividend of $1.75 per share, to be paid on September 28, 2018, to stockholders of record on September 19, 2018.
Fellow chipmaker Qualcomm (QCOM), which recently made an unsuccessful bid to acquire Broadcom, reported a sharp increase in its third-quarter earnings, helped by reduced costs and an impressive performance by the technology licensing segment. Earnings of Intel (INTC) surged 78% in the second quarter on the strength of the company’s datacenter business.
Broadcom shares hit an all-time high in November last year as they continued the steady ascent that started several years ago. However, the stock lost momentum after hitting the peak and dropped about 17% since the beginning of the year. It gained more than 3% in the extended trading hours Thursday.