Broadcom recently reported its fiscal third-quarter results, exceeding the expectations set by Wall Street analysts. The chipmaking conglomerate managed to outperform in both revenue and earnings, showcasing a strong financial performance. However, despite the positive results, Broadcom shares experienced a 7% drop in extended trading following the release of the company’s guidance numbers.
Financial Results Comparison
When comparing Broadcom’s actual numbers to the LSEG consensus estimates for the quarter ending on August 4th, the results were encouraging. The company reported adjusted earnings per share of $1.24, surpassing the expected $1.20 per share. Additionally, Broadcom’s revenue stood at $13.07 billion, slightly higher than the anticipated $12.97 billion. Looking ahead, Broadcom projected current-quarter revenue of $14 billion and earnings per share of $1.36, aligning with the market’s expectations.
One notable aspect of Broadcom’s third-quarter report was the reported net loss of $1.88 billion, translating to a loss of 40 cents per share. This figure is a stark contrast to the net income of $6.12 billion, or $1.24 per share, recorded in the same quarter the previous year. The company attributed this net loss primarily to a one-time tax provision of $4.5 billion related to the trading of intellectual property rights between segments based in the U.S. as part of supply chain management.
Despite the recent drop in share value, Broadcom has seen a 75% increase over the past year. Investors have recognized the company’s significant role in providing essential components for large data centers and AI infrastructure. For instance, Broadcom collaborates on Google’s TPU chip, utilized by Apple for training AI features. CEO Hock Tan revealed that Broadcom anticipates $12 billion in sales from AI parts and custom chips in fiscal 2024, surpassing the prior estimate of $11 billion.
Segment Performance
During the fiscal third quarter, Broadcom generated $7.27 billion in semiconductor sales, representing a 5% annual increase. This segment remains the primary revenue driver for the company, outperforming the infrastructure software segment that recorded $5.8 billion in sales. The latter largely stems from Broadcom’s acquisition of VMware.
Broadcom’s strong fiscal third-quarter results underscore its continued growth and innovation in the semiconductor industry. Despite facing challenges such as the one-time tax provision impacting net income, the company remains well-positioned for future success in AI and custom chip sales.
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