Semiconductor maker Broadcom reported earnings and revenue that topped Wall Street's targets for its fiscal fourth quarter amid strength in its internet data center, computer server and data storage businesses. Management's January quarter revenue outlook for AVGO stock edged by analyst estimates.
The chip maker reported earnings after the market close on Thursday. Broadcom earnings for the October-ending quarter came in at $10.45 a share on an adjusted basis, up 34% from a year earlier. Revenue rose 21% to $8.93 billion in the quarter.
Analysts polled by FactSet expected Broadcom earnings of $10.29 a share on sales of $8.9 billion. A year earlier, the San Jose, Calif.-based company earned $7.81 per share on sales of $7.41 billion.
For the current quarter ending on Jan. 30, Broadcom predicted sales of $8.9 billion. Analysts expected revenue of $8.78 billion in the fiscal first quarter.
"AVGO is not providing a full-year outlook at this time (a break from normal practices), though management indicated the company is fully booked through fiscal 2023, without providing quantification," said Raymond James analyst Melissa Fairbanks in a report.
AVGO Stock: Smartphone Shipments Fall In 2022
On the stock market today, AVGO stock rose 2.6% to close at 544.72. Broadcom stock has retreated 21% thus far in 2022 amid the bear market.
The company increased the dividend for AVGO stock by 12% to $4.60 per share.
Broadcom makes wireless chips for smartphones, such as Apple iPhones. Covid-related factory lockdowns in China have slowed iPhone production.
Market research firm IDC forecasts that shipments of smartphones will decline 9.1% in 2022 to 1.24 billion units. It expects 2.8% growth in 2023.
Broadcom also makes semiconductors for broadband communications, networking, storage and industrial applications. Cloud computing companies are big customers.
"Management called out $2 billion in annualized revenue from its compute offload custom silicon, notably 33% higher year-over-year, underscoring the willingness of hyperscalers to fund investments for strategic infrastructure," said Jefferies analyst Mark Lipacis in a report.
Plus, Broadcom has a growing business in infrastructure software for mainframes, data centers and cybersecurity.
The company said quarterly chip sales rose 26% to $7.09 billion while infrastructure software sales increased 4% to $1.84 billion.
VMware Deal To Expand Software Business
In May, Broadcom announced a deal to buy VMware for $61 billion in cash and stock. VMware provides cloud-computing management, infrastructure, networking, security and digital workspaces.
VMware reported October-quarter earnings and revenue below expectations. Broadcom's fiscal 2023 outlook excludes VMware. The acquisition is expected to close in early 2023.
According to IBD Stock Checkup, AVGO stocks holds a Composite Rating of 87 out of a best-possible 99.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
