Broadcom warns of slow growth in its wireless business in the third...

Broadcom warns of slow growth in its wireless business in the third quarter, shares down

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Broadcom Inc. (AVGO) announced its financial results for the second quarter that surpassed consensus estimates, as strong demand for its networking chips and storage solutions made up for slow growth in its wireless business.

The San Jose, California-based company said revenue from wireless is expected to remain flat or slightly down in the current quarter, as growth in demand from a big smartphone customer in North America will be offset by a fall in shipments to a Korean customer. Experts believe that North American customer is Apple Inc, while Samsung Electronics is the Korean customer.

Speaking to analysts on a conference call, CEO Hock Tan said the company expects demand from cloud data centers and enterprise IT to remain strong.

Broadcom reported net income of $3.72 billion, or $8.33 a share for the three-month period ended May 6, representing a surge of about nine-fold from the comparable quarter last year. On an adjusted basis, the company earned $4.88 a share. Analysts on average were looking for a profit of $4.76 a share.

Revenue for the quarter came in at $5.01 billion, up 19.7 percent from the same period last year, and above consensus forecast of $5.00 billion.

Sales at its wired infrastructure business climbed 46 percent to $2.30 billion. The segment sells data center switching chips to clients, including e-commerce giant Amazon.com Inc.

The company’s wireless communications business generated revenue of $1.30 billion in the just-ended quarter, up 26 percent from the same period last year, but below a rise of 41 percent in the first quarter. The segments supply RF filters and Wifi chips to smartphone makers.

Broadcom shares fell more than two percent in the after-hours trading on Thursday after the company warned of a decline in wireless business in the third quarter.

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Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.

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