By Sonam Rai
(Reuters) – Broadcom Inc <AVGO.O> on Thursday reported quarterly revenue and profit above analysts’ estimates, driven by strong demand for its enterprise storage and networking products from data centres, sending its shares up 5 percent in extended trading.
The chipmaker also forecast better-than-expected full-year revenue and said it would not be giving quarterly guidance going forward.
Chief Executive Officer Hock Tan said the first quarter of fiscal 2019 is expected to be “okay”, in response to an analyst’s question during the company’s post-earnings call.
Tan said he sees a seasonal “downtick” in its wireless business, which makes chips for smartphones including Apple Inc’s <AAPL.O> iPhones.
A handful of Apple suppliers have cut their forecasts for the December quarter, suggesting tepid demand for new iPhones.
Broadcom’s results beat was mainly driven by a better product mix and lower operating expenses, said Kinngai Chan, an analyst with Summit Insights Group.
The chipmaker acquired software maker CA Technologies for $19 billion earlier this year, aiming to diversify its revenue stream in the wake of a cooling semiconductor cycle. The move came after it failed to buy Qualcomm Inc <QCOM.O> in the biggest-ever technology deal.
Revenue from Broadcom’s wireless communications business, which makes RF filters and Wi-Fi chips for smartphones, contributed 31 percent to the sales, above Broadcom’s earlier expectations, but fell 5 percent to $1.70 billion from a year earlier.
“We benefited from upside volumes of legacy phone generations at our North American OEM customer,” Tan said.
Analysts say the North American customer is Apple.
The San Jose, California-based Broadcom also said going forward its two primary business segments will be semiconductor solutions and infrastructure software.
For the full year, Broadcom expects revenue of $24.50 billion, above analysts’ estimates of $22.40 billion, according to IBES data from Refinitiv.
Net income attributable to ordinary shares rose to $1.12 billion, or $2.64 per share, in the fourth quarter ended Nov. 4, from $532 million, or $1.25 per share, a year earlier.
Excluding items, the company earned $5.85 per share.
Net revenue rose 12.4 percent to $5.44 billion.
Analysts on average were expecting earnings of $5.58 per share on revenue of $5.39 billion.
(Reporting by Sonam Rai in Bengaluru; Editing by Anil D’Silva and Shailesh Kuber)