How a Big Bottom Line Beat Saved Broadcom

March 14, 2019 by 247chrislange

When Broadcom Inc. (NASDAQ: AVGO) reported its most recent earnings after markets closed Thursday. The firm posted $5.55 in earnings per share (EPS) and $5.79 billion in revenue, compared with consensus estimates that were calling for $5.23 in EPS and $5.82 billion in revenue. The fiscal first quarter from last year had $5.12 in EPS and $5.33 billion in revenue.

Gross margin was 55.4% of net revenue, which compares with a gross margin of 53.9% in the prior quarter, and gross margin of 49.3% in the same quarter last year.

During the first fiscal quarter, Broadcom generated $2.13 billion in cash from operations and spent $3.44 billion in share repurchases. On the books, cash and cash equivalents totaled $5.09 billion at the end of the quarter, versus $4.29 billion at the end of the previous fiscal year.

Looking ahead to the fiscal full year, the company expects to see revenues of $24.5 billion with an operating margin of 51.0%. Consensus estimates are calling for $22.76 in EPS and $24.31 billion in revenue for the coming full year.

Hock Tan, President and CEO of Broadcom, commented:

We had a good start to 2019 as we continued to execute on our proven business model. Strong results in our networking business supported our semiconductor solutions segment, despite the anticipated sharp decline in wireless. Additionally, our infrastructure software segment performed extremely well as we made good progress with the CA business integration into Broadcom. Similar to our peers, we see a slowdown in China impacting demand. However, much of this was factored into our original guidance and we are maintaining our full year fiscal 2019 business outlook.

Shares of Broadcom closed Thursday at $268.20, with a 52-week range of $197.46 to $286.63. The stock has a consensus analyst price target of $293.23. Following the announcement, the stock was up 5.7% at $283.53 in the after-hours session.