By Maria Armental 
 

Chip maker Broadcom Inc.'s stock gained 5% to $324.85 Friday, a day after reporting record quarterly free cash flow of $3.07 billion and projecting revenue for the current quarter roughly in line with analysts projections despite pandemic-related business disruption.

Broadcom's stock has been trading near record highs.

The company said it expects $5.75 billion in revenue this quarter, including a 3% sequential revenue increase in semiconductors and a 7% sequential revenue decline in software.

Broadcom Chief Executive Hock Tan said the company was seeing a surge in demand in networking, storage and broadband. That was somewhat offset by supply chain constraints that has led to extended lead times, now running at historical highs, he said, and a major product cycle delay in wireless. Overall, he said, Broadcom's core semiconductor solution revenue is expected to decline 5% from the year earlier.

Mr. Tan said that in the third quarter Broadcom has "much more demand than we can supply, and this may very well continue beyond."

Analysts pointed to the delayed production of Apple Inc.'s new iPhones and said they expected a strong fourth quarter for Broadcom.

Free cash flow beat J.P. Morgan analysts' projection by roughly $500 million, "and taking into account various scenarios for the remainder of the fiscal year, we believe there is a possibility that the dividend could be increased in December if they have a strong F4Q," the analysts wrote in a note Friday.

Broadcom officials didn't address any possible increase, but Chief Financial Officer Tom Krause said: "Given our strong free cash flow generation, healthy balance sheet and enhanced liquidity position, we remain committed to maintaining our dividend while we navigate these unprecedented times."

Mr. Krause also noted that the company had de-risked its balance sheet, refinancing more that $18 billion of debt and pushing out average debt maturities to six years, from four years, while increasing the average cost of debt fractionally.

All told, Mr. Krause said, Broadcom ended the quarter with about $9 billion in cash and $45.8 billion in debt, including roughly $800 million in short-term debt.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

June 05, 2020 12:34 ET (16:34 GMT)