Broadcom has been on a buying spree the past six years.
David Paul Morris/Bloomberg
Broadcom stock took a hit Thursday even though the company issued a quarterly earnings report that topped expectations by most measures.
Broadcom (ticker: AVGO) shares closed the regular session down 4.2% to $443.59 and fell about 3.5% in the extended session. The company’s stock has gained 55% in the past year, as the benchmark PHLX Semiconductor index rose 58%.
The infrastructure software and chipmaking roll-up reported fiscal first- quarter net income of $1.3 billion, or $3.05 a share, compared with a net profit of $311 million, or 74 cents a share, in the year-ago quarter. Adjusted for stock compensation, among other things, earnings amounted to $6.61, compared with $5.25 a year ago. Revenue rose 14% to $6.66 billion.
Analysts had expected adjusted earnings of $6.57 a share on sales of $6.62 billion.
“This growth reflects the critical role our technology franchises play in this environment of accelerated digital transformation,” CEO Hock Tan said.
The company’s adjusted per-share earnings, not prepared under generally accepted accounting principles, exclude $444 million in stock-compensation expenses and $1.37 billion in amortization of intangible assets related to acquisitions.
Broadcom has spent over $80 billion on acquisitions over the past six years, according to Credit Suisse analyst John Pitzer.
Broadcom reported revenue for its infrastructure software segment rose 5% to $1.75 billion. Analysts had modeled software sales of $1.69 billion. Its chip revenue grew 17% to $4.91 billion, roughly $20 million below the consensus estimate of $4.93 billion.
For the fiscal second quarter, analysts expect adjusted earnings of $6.23 a share and sales of $6.33 billion. Broadcom said it expected fiscal second-quarter sales of roughly $6.5 billion, and adjusted profit of 59% of projected revenue. The company didn’t issue per-share earnings guidance.
Earlier this week Pitzer raised his target price on Broadcom to $580 from $480, and reiterated his Buy rating.
Write to Max A. Cherney at [email protected]
