Chip Maker Broadcom Swings To Profit -- WSJ
December 07 2017 - 3:02AM
Dow Jones News
By Imani Moise and Ted Greenwald
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 7, 2017).
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.
In a conference call with analysts, Broadcom offered little
about the hostile bid aside from saying it aims to "engage in a
constructive dialogue," has received positive shareholder and
customer reactions, and believes it can complete a transaction,
including regulatory approvals, within 12 months of striking a
deal.
The company said it wouldn't answer questions about the bid or
its planned move from Singapore to the U.S.
Broadcom's profit was boosted by sales of smartphone parts to "a
large North American smartphone customer," presumably Apple Inc.,
which offset weakness in its core wired-infrastructure business.
Chief Executive Hock Tan said he expected wireless growth to
continue into the current quarter as that customer's new products
had been "pushed out" compared with prior years. The iPhone X
preorders began in October, while the iPhone 8 launched in
September.
Sales in Broadcom's wireless-communications unit, which brings
in more than a third of revenue, grew 33%, while sales in wired
infrastructure, which account 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.
Broadcom's takeover bid for Qualcomm turned hostile earlier this
week when Broadcom nominated candidates to overhaul its target's
board of directors after Qualcomm 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 next-generation cellular
technologies, and comes with substantial risk of regulatory
interference.
In 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 4.2% to $274.92 after hours, adding to the 0.9% gain
logged during Wednesday trading.
Write to Imani Moise at imani.moise@wsj.com and Ted Greenwald at
Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
December 07, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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