Smartphone Parts Boost Broadcom's Earnings
By Imani Moise
Broadcom Ltd. reported higher-than-expected earnings in the most recent quarter as the chip maker looks to convince Qualcomm Inc.'s shareholders to back its $105 billion takeover bid.
Profit was boosted by sales of smartphone parts, which offset weakness in its core wired-infrastructure business. Sales in Broadcom's wireless-communications segment, which makes chips for Apple Inc.'s iPhones and enterprise-storage units, grew 33% while sales in wired infrastructure, which still accounts for 45% of sales, edged up 3%.
Broadcom also provided an upbeat outlook in its current quarter, forecasting revenue between $5.22 billion and $5.37 billion. The forecast includes sales from its recent acquisition of Brocade Communications Systems Inc. Analysts polled by Thomson Reuters had forecast $4.83 billion in sales.
The takeover bid turned hostile earlier this week when Broadcom nominated candidates to overhaul Qualcomm's board of directors after the company rejected its unsolicited offer. Broadcom has been working to convince investors that its offer of $70 a share provides the most value to shareholders. Qualcomm said Broadcom's proposal undervalued it, touting its leadership in innovative markets such as automotive and next-generation cellular technologies.
Overall for the fourth quarter, Broadcom swung to a profit of $636 million, or $1.50 a share, compared with a loss of $632 million, or $1.59 per share, a year earlier. On an adjusted basis, earnings grew to $4.59 per share from $3.47 a year ago.
Revenue jumped 8.5% to $4.84 billion.
Analysts had projected adjusted earnings of $4.52 a share on $4.83 billion in revenue.
Broadcom also said Wednesday it would raise its quarterly dividend to $1.75 a share from $1.02 a share.
Shares rose 1.3% to $267.62 after hours, adding to the 0.9% gain logged during Wednesday trading.
Write to Imani Moise at email@example.com
(END) Dow Jones Newswires
December 06, 2017 17:20 ET (22:20 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.