Broadcom reported it increased its fiscal second-quarter revenue by 4 percent year-over-year on Thursday. However, the chipmaker recorded .47 and 1.34 percent declines in adjusted net income and earnings per share.
Broadcom’s FQ Earnings
In the three months ending May 3, the San Jose, California-based manufacturer generated $5.74 billion in revenue. As such, the corporation exceeded its FQ2 2019 sales of $5.51 billion and topped Wall Street’s consensus estimate of $5.69 billion. The firm also turned in earnings results in line with its now-withdrawn fiscal second-quarter intake range of $5.55 billion to $5.85 billion.
On a per-segment basis, Broadcom’s semiconductor solutions group made $4.027 billion in FQ2, down 2 percent from 2019. The firm also noted its infrastructure software unit brought in $1.715 billion last period, a yearly improvement of 21 percent. Market Watch reports the chipmaker’s core businesses outperformed analysts’ projections.
In a statement, CEO Hock Tan said the coronavirus pandemic had “limited impact” on his firm’s operations. In April, the company warned its clients’ COVID-19 lockdowns caused delays in its production process, which necessitated longer lead times. But the manufacturer’s robust FQ2 revenue suggests it found ways to mitigate the global health crisis’s effect on its business.
Broadcom’s FQ3 Outlook and Possible iPhone Delay
Broadcom expects to bring in revenue of $5.75 billion, plus or minus $150 million in FQ3.
The corporation also predicts adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $3.22 billion, with a 2.329 percent variable. Compared to its 2019 fiscal third-quarter results, the firm’s outlook reflects sales growth of either 1.63 to 4.35 percent. Similarly, the chipmaker’s adjusted EBITDA forecast reflects an increase in income of between 2.64 to 5 percent.
Hock explained Broadcom crafted its FQ3 guidance in response to surging demand for its cloud, telecommunications, and enterprise semiconductors. The chief executive also said supply chain constraints and a “substantial reset in wireless” tempered its June period outlook. Bloomberg reported the corporate leader mentioned his firm’s near-term revenue would be affected by “major product cycle delay” from “a large North American mobile phone” client.
Although Hock did not name the brand in question, the publication suggested he could be referring to Apple.
Bloomberg stated Broadcom’s CEO has previously used similar language when alluding to the Big Tech giant. Hock also said the chipmaker expects an uptick in its wireless sales in the fiscal fourth quarter. His estimates align with reports the iPhone 5G will launch later than the handset’s traditional September window. As of this writing, Apple has not publicized preorder or release information for its next flagship smartphone.
While Broadcom will take a near-term hit because of the “product cycle delay,” the firm is in a good position moving forward. Even with a dip in its mobility revenue, the manufacturer sees growth in the current period and exited FQ3 with over $9 billion in cash. As such, the chipmaker should prevail despite the challenges it is presently facing.