Broadcom Earnings and Guidance Set an Example

The company gave guidance for the quarter ending in December of a total net revenue of $2.0 billion to $2.15 billion, but it did not offer up non-GAAP revenue guidance in its outlook. Broadcom also predicts a product gross margin of roughly 55%. Thomson Reuters has consensus estimates for the fourth quarter of $0.83 in earnings per share and $2.11 billion in revenue. Net income for the third quarter was reported as $569 million compared to the second quarter’s net income of $406 million.

On the balance sheet Broadcom is responsible for 12.2 billion in total assets which increased 6% from the previous year ending in December 2013. Of these assets the company had cash, short-term and long-term securities totaling $5.42 billion which was up almost $400 million from the previous quarter sequentially and over $1 billion from the previous year end. Broadcom had a Non-GAAP product gross margin 54.3%.

Scott McGregor, Broadcom’s President and Chief Executive Officer, said,

“Broadcom delivered record quarterly revenue and better than expected operating results. Our strong performance was driven by the Broadband and Connectivity business and diligent expense management. Longer term, the company’s renewed focus on its core businesses is expected to produce improved margins and cash flows, enabling increased capital return.”

We have two recent analyst calls worth noting. Canaccord Genuity reiterated a Buy rating for Broadcom but lowered the price target to $45 from $46 on October 15. Oppenheimer has an Outperform rating for Broadcom but lowered its price target to $48 from $50 on October 14.

Shares of Broadcom closed Tuesday up just below 3% at $37.33 from the previous close $36.30. In the after-hours the initial reaction to the earnings report was positive and shares were up over 4% to $39.10. The company’s stock has a consensus analyst price target of $43.17 and a 52-week trading range of $24.60 to $41.65. It has a market cap of $22 billion.