Broadcom Looks Attractive

Second-quarter revenue was $5.0 billion, down 6% sequentially due to the aforementioned weakness in wireless, which fell 41% from the prior quarter to $1.3 billion. Wired infrastructure rose 22% sequentially to $2.3 billion, reflecting robust demand from cloud data centers as well as a seasonal recovery in broadband access. Enterprise storage sales were up 17% quarter-over-quarter to $1.2 billion, with $400 million in revenue derived from the recently acquired Brocade fiber channel switch business. We note this segment would still have exhibited year-over-year growth sans Brocade. Broadcom’s adjusted gross margins were 66.6%, up 180 basis points sequentially due to a more favorable product mix with higher wired and lower wireless revenue.

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