Broadcom Profit Surges as Enterprise Storage Business Grows -- Update
06 Septiembre 2018 - 8:29PM
Noticias Dow Jones
By Maria Armental
Broadcom Inc. plans to substantially raise payouts to
shareholders on the back of strong results that mark the sixth
straight quarter of more-than-doubled profit.
In the first earnings call since the company announced plans to
buy software company CA Inc., news that had hit Broadcom's stock
hard, Chief Executive Hock Tan defended the proposed deal saying
that CA offers a "big doorway," a "new and huge opportunity."
"We're buying CA because of their customers and [CA's]
importance to these customers," Mr. Tan said in the Thursday call
reviewing third-quarter results. "CA sells mission-critical
software to virtually all of the world's largest enterprises."
The proposed $19 billion takeover, months after its $117
billion-plus hostile bid for Qualcomm Inc. was blocked by President
Trump, represents a strategic move for Broadcom and would roughly
triple the size of its current opportunity in the estimated $200
billion market for infrastructure technology, Broadcom finance
chief Tom Krause had previously told The Wall Street Journal in an
interview.
Meanwhile, enterprise storage revenue, up nearly 60% three
quarters into the company's business year, has been bolstered by
last year's Brocade acquisition. Stripping out the Brocade
contribution, Mr. Tan told analysts in June, that the business
would be roughly flat year-over-year.
On Thursday's call, Mr. Krause said the company had fielded
questions and stressed that the company doesn't see any fundamental
changes in its long-term growth rate or that of its core
business.
In the most recent quarter, company officials said, the wired
infrastructure and enterprise storage segments again drove revenue
growth, offsetting continued weakness in wireless communications
segment. The wireless communications segment, Messrs. Tan and
Krause said Thursday, is expected to return to double-digit revenue
growth in fiscal 2020, following a temporary dip in fiscal
2019.
The enterprise storage segment, which got a big revenue boost
from the Brocade acquisition, saw revenue in the latest period
increase 70% from the year-ago period. But even without the Brocade
contribution, Mr. Tan said, "storage was robust year-over-year in
the third quarter" and storage revenue growth is expected to
accelerate in the fourth quarter.
Overall, Broadcom's third-quarter profit surged to $1.2 billion,
or $2.71 a share, from $481 million, or $1.14 a share, a year
earlier. Profit from continuing operations rose to $4.98 a share
from $4.10 a share a year earlier, while revenue from continuing
operations rose 13% to $5.07 billion.
Analysts surveyed by Thomson Reuters expected a profit of $2.70
a share, or $4.83 as adjusted, on $5.07 billion in revenue.
Gross profit margin improved to 51.7% from 48.2% a year
earlier.
This quarter, Broadcom expects about $5.4 billion in revenue,
compared with analysts' projected $5.35 billion.
Based on that forecast and the company's performance for the
first nine months of the year, Mr. Krause said Broadcom anticipates
"another substantial increase" in quarterly dividend payouts.
In December, Broadcom raised the dividend payouts to $1.75 a
share from $1.02 a share.
Broadcom's policy is to distribute half of its prior fiscal year
free cash flow to shareholders through cash dividends, with the
remainder of the money typically being used for acquisitions or to
buy back stock.
As of Aug. 5, Broadcom reported more than $2 billion///$2.13
billion ///in free cash flow.
Shares, which lag the market with a 16% decline this year, rose
3.7% to $223.94 in after-hours trading.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
September 06, 2018 21:14 ET (01:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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