Why Broadcom Shares Are Sinking
Broadcom's shares slipped after it released its fiscal second-quarter financial results after the markets closed on Thursday.
When Broadcom Inc. (NASDAQ: AVGO) released its fiscal second-quarter financial results after the markets closed on Thursday, the company said that it had $4.88 in earnings per share (EPS) and $5.01 billion in revenue. The consensus estimates had called for $4.77 in EPS and revenue of $5.0 billion. In the same period of last year, it said it had EPS of $3.69 and $4.19 billion in revenue.
The board of directors approved a quarterly cash dividend of $1.75 per share that will be payable on June 29, for shareholders as of record on June 20.
On the books, Broadcom cash and cash equivalents totaled $8.19 billion at the end of the quarter, compared to $7.08 billion at the end of the same period last year.
Looking ahead to the fiscal third quarter, the company expects to see net revenues in the range of $4.975 billion to $5.125 billion with a gross margin of 65.5% to 67.5%. The consensus estimates call for $4.57 in EPS and $5.06 billion in revenue.
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Hock Tan, president and CEO of Broadcom, commented:
Our business continues to be very robust and sustainable. This is validated through our strong execution in the second quarter which drove gross margin to a record 66.6 percent and free cash flow to 42.3 percent of net revenue. Reflecting our commitment to our return of capital program and our belief that stock repurchases can generate attractive returns on our earnings capability, we bought back 6.4 million shares in the six weeks ended June 1, 2018 returning $1.5 billion to stockholders.
Shares of Broadcom closed Thursday at $264.68, with a consensus analyst price target of $309.92 and a 52-week trading range of $221.98 to $285.68. Following the announcement, the stock was down about 1.5% at $260.60 in early trading indications Friday.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
