Semiconductor device supplier Broadcom (AVGO), reported a year-over-year jump of 20% in its revenue to $5.01 billion topping analyst estimates, driven by double-digit growth in its wireless, enterprise and industrial segments. Earnings came in at $3.73 billion, significantly higher from the $464 million reported in the prior year quarter. On a per share basis, profit surged to $8.33 per share, up from the year-ago figure of $1.05.
“Our business continues to be very robust and sustainable. This is validated through our strong execution in the second quarter which drove gross margin to a record 66.6 percent and free cash flow to 42.3 percent of net revenue,” said Hock Tan, CEO.
Reviewing the company’s business segments, Broadcom’s all segments reported positive sales increases year-over-year, with Wireless Communications, Enterprise Storage and Industrial and Other posting double-digit increases in sales, while Wired Infrastructure grew by 9%.
Earlier, the company had stated that it is seeing significant strength in Enterprise Storage and Industrial segments with weakness in Wireless. As expected, Enterprise Storage and Industrial grew 63% and 21% respectively, as Broadcom saw demand for its networking chips and storage solutions from data centers grow in the quarter.
Growth in Wireless and Wired was a bit lower, with Wireless segment impacted by lower iPhone sales. Broadcom’s Wireless segment, which generates about 35% of its revenue, depends to a great extent on iPhone sales.
Earnings came in at $3.73 billion, significantly higher from the $464 million reported in the prior year quarter.
Broadcom had recently shifted its headquarters from Singapore to the US at San Jose, California. With this change, the company can now expect to restart its acquisition plans of other smaller entities after the much awaited Qualcomm (QCOM) deal could not materialize earlier due to security concerns.
Post the earnings release, the stock reacted least to the results, remaining almost flat at $264.
Looking forward into the third quarter, the company expects GAAP net revenue of $5.047 billion, plus or minus $75 million and on a non-GAAP basis, revenue is expected to come in at $5.05 billion, plus or minus $75 million. For the third quarter, reported gross margin is expected in the range of 49.75% to 51.75%, with operating expenses targeted at $1.27 billion.
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