

Computer chipmaker Broadcom Inc. made impressive gains today, its stock up more than 6% in after-hours trading following fourth-quarter financial results that beat analysts’ targets.
The company followed that with an outlook for the next quarter that was higher too.
Broadcom reported a net profit for the quarter of $1.98 billion, or $7.81 per share, on revenue of $7.41 billion, up 15% from a year ago. Wall Street had been modeling a profit of $7.74 per share on revenue of $7.36 billion.
For its full fiscal 2021, Broadcom reported revenue rose 15%, to $27.45 billion, and a net profit of $6.73 billion.
Broadcom President and Chief Executive Hock Tan said the company delivered record results thanks to a rebound in enterprise and ongoing demand for its chips from cloud and service providers.
“Our infrastructure software growth continues to be steady with our focus on strategic customers,” Tan said. “With the strength and breadth of our IP portfolio, we continue to be able to uniquely deliver leading edge, best-in-class semiconductor solutions, and extend our leadership in our franchise markets.”
The COVID-19 pandemic and the widely documented global semiconductor shortage has been good to Broadcom. The company’s main business involves making wireless chips for smartphones such as Apple Inc.’s iPhones. It also makes silicon for use in broadband communications, networking, storage and industrial applications. Besides that, it has a growing infrastructure software business for mainframes, cybersecurity and data centers.
Broadcom breaks down its revenue into two segments. Semiconductor solutions delivered the lion’s share, with sales of $5.63 billion in the quarter, up 17% from a year ago. The company’s infrastructure software segment added $1.77 billion, up 8%.
“While other tech vendors grow revenues at the cost of rising expenses, industry veteran Broadcom shows them how it’s done, both growing and somehow keeping a lid on its costs,” said Holger Mueller of Constellation Research Inc. “The result is a larger and more profitable Broadcom than ever before. This bodes well for customers and shareholders alike.”
The good times are expected to continue into Broadcom’s next fiscal year too, with the company offering a very positive outlook that implies revenue growth of 14% from the previous year. Officials said they’re looking at fiscal first-quarter revenue of about $7.6 billion, which is some way ahead of Wall Street’s forecast of $7.24 billion.
“As a chipmaker, if you have supply you will grow because you have pricing power versus the end customers,” said analyst Patrick Moorhead of Moor Insight & Strategy. “I am impressed by the software growth of 8% too, as a lot of its software is linked to mainframes, which are in an off-cycle. Broadcom‘s biggest ongoing challenge will be organic growth after supply constraints go away.”
Broadcom Chief Financial Officer Kirsten Spears said the company had achieved a record-breaking adjusted earnings before interest, taxes, depreciation and amortization margin of 60% in fiscal 2021, generating $13.3 billion of free cash flow.
Spears also said the company is increasing its target quarterly common stock dividend by 14%, to $4.10 per share per quarter for fiscal year 2022. It also announced a new $10 billion share repurchase program.
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