Broadcom CEO sees ‘sustaining’ demand from telecom and cloud providers, with enterprise sales picking up in 2022
Broadcom Inc. shares ticked down in the extended session Thursday after the chip and software company reported quarterly results and an outlook that cleared Wall Street estimates, and said it sees strong demand continuing from telecoms and cloud-providers.
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On the call with analysts, Hock Tan, Broadcom president and chief executive, said chip demand from telecoms and cloud-service providers was “running well, quite hard, and it looks like they are sustaining.”
Broadcom forecast revenue of about $7.35 billion for the fiscal fourth quarter, while analysts had estimated revenue of $7.23 billion.
“They seem to be sustaining where we are right now,” Tan said. “And regarding enterprise, it’s pretty much what we had indicated before and continue to see, which is a continuing trajectory of improving demand, spending and demand, and we see that continuing to improve and grow next — this coming quarter, Q4, and beyond.”
“In fact, I would say that the engine for growth for our semiconductor business in 2022 will likely be enterprise spending,” Hock told analysts.
Concerning fab capacity, however, Tan said Broadcom will get by but indicated it could be better. Broadcom uses third-party fabs like Taiwan Semiconductor Manufacturing Co. TSM,
“As far as our capacity for 2022, I think we have gotten a pretty good supply availability lineup for 2022 and we feel pretty OK about that,” Tan said. “I wouldn’t say great, but in this environment, all things considered, we’re feeling quite good.”
The company reported fiscal third-quarter net income of $1.88 billion, or $4.20 a share, compared with $688 million, or $1.45 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation and other items, were $6.96 a share, compared with $5.40 a share in the year-ago quarter.
Revenue rose to $6.78 billion from $5.82 billion in the year-ago quarter. Analysts surveyed by FactSet had expected earnings of $6.88 a share on revenue of $6.76 billion, based on Broadcom’s forecast revenue of about $6.75 billion.
The company reported a 19% gain in chip sales to $5.02 billion from the year-ago period, and a 10% rise in infrastructure software sales to $1.76 billion. Analysts had forecast chip sales of $5.06 billion and infrastructure software sales of $1.67 billion.
Over the past 12 months, shares of Broadcom have gained 31%. In comparison, both the S&P 500 index SPX,
