SINGAPORE (Dec 7): Broadcom reversed back into profitability in 4Q ended Oct as the chipmaker makes a US$105 billion ($142 billion) bid for Qualcomm Inc.
In the latest quarter, Broadcom swung to higher than expected earnings of US$636 million, or US$1.50 a share, compared with a loss of US$632 million, or US$1.59 per share, a year earlier. On an adjusted basis, earnings grew to US$4.59 per share from US$3.47 a year ago.
Revenue jumped 8.5% to $4.84 billion. Analysts had projected adjusted earnings of US$4.52 a share on $4.83 billion in revenue.
Broadcom’s profit was boosted by sales of smartphone parts to “a large North American smartphone customer” reportedly Apple Inc., which offset weakness in its core wired-infrastructure business.
Broadcom plans to raise its quarterly dividend to US$1.75 a share from US$1.02 a share.
Chief Executive Hock Tan says he expected wireless growth to continue into the current 1Q ended Jan as that customer’s new products had been “pushed out” compared with prior years. Preorders for iPhone X began in October, while the iPhone 8 was launched in September.
Sales in Broadcom’s wireless-communications unit, which brings in more than a third of revenue, grew 33%, while sales in wired infrastructure, which account for 45% of sales, edged up 3%.
Broadcom also provided an upbeat outlook for 1Q, forecasting revenue between US$5.22 billion and US$5.37 billion. The forecast includes sales from its recent acquisition of Brocade Communications Systems Inc. Analysts polled by Thomson Reuters had forecast US$4.83 billion in sales.
Broadcom’s takeover bid for Qualcomm turned hostile earlier this week when Broadcom nominated candidates to overhaul its target’s board of directors after Qualcomm rejected the unsolicited offer, saying the proposal undervalued it.
See: Broadcom's Tan got his way on deals; then he targeted Qualcomm
See also: Broadcom presses on in takeover bid; proposes to replace Qualcomm's board of directors
See also: Singapore's largest company by market cap eyes US$105 bil takeover deal
Shares rose 4.2% to US$274.92 after hours, adding to the 0.9% gain logged during Wednesday trading.
