Broadcom Short-Circuits on Q2 Results

By Chris Lange Updated Jan 30, 7:40PM EST · Published Jun 13, 4:29PM EDT

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Broadcom Short-Circuits on Q2 Results — © Justin Sullivan / Getty Images

Broadcom Inc. (NASDAQ: AVGO | AVGO Price Prediction) reported its most recently quarterly results after the markets closed on Thursday. The company said that it had $5.21 in earnings per share (EPS) and $5.52 billion in revenue, compared with consensus estimates that called for $5.18 in EPS and $5.69 billion in revenue. The same period from last year had $4.88 in EPS and $5.02 billion in revenue.

Overall revenues decreased 4.7% quarter over quarter, but actually increased 10.0% year over year. Gross margin was 72.0% for the quarter, up from 71.4% in the previous quarter, and 66.6% in the same period from last year.

In terms of its segments, the firm reported:

Semiconductor solutions revenues are down 9.9% year over year to $4.09 billion.
Infrastructure software revenues increased $1.41 billion, up from $447 million.
Intellectual property licensing revenues decreased to $16 million from $30 million.

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Looking ahead to the fiscal 2019 full year, the company expects to see net revenues of $22.5 billion with an operating margin of 52.5%. Consensus estimates are calling for $23.05 in EPS and $24.41 billion in revenue for the fiscal full year.

Hock Tan, president and CEO of Broadcom, commented:

We executed according to plan in the second quarter with tailwinds from networking offsetting the anticipated headwinds from wireless. We currently see a broad-based slowdown in the demand environment, which we believe is driven by continued geopolitical uncertainties, as well as the effects of export restrictions on one of our largest customers. As a result, our customers are actively reducing their inventory levels, and we are taking a conservative stance for the rest of the year. We remain well-positioned across our various semiconductor and software businesses and are confident this portfolio of franchises will continue to drive sustained long-term revenue growth and increasing free cash flow.

Shares of Broadcom closed Thursday at $281.61, with a 52-week range of $197.46 to $323.20. The stock has a consensus analyst price target of $316.61. Following the announcement, the stock was down 7% at $262.00 in the after-hours session.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.