Broadcom Inc., one of the world’s biggest chipmakers, gave a rosy revenue forecast for the current quarter, indicating that companies are still spending on corporate networking infrastructure.
(Bloomberg) — Broadcom Inc., one of the world’s biggest chipmakers, gave a rosy revenue forecast for the current quarter, indicating that companies are still spending on corporate networking infrastructure.
Revenue in the fiscal second quarter will be about $8.7 billion, Broadcom said in a statement Thursday, compared with an average analyst estimate of $8.58 billion.
The outlook suggests Broadcom continues to weather a slowdown better than many of its chip peers. Chief Executive Officer Hock Tan has sought to avoid an inventory glut by carefully managing supplies, relying in part on strict policies that prevent customers from canceling orders.
“Broadcom’s first quarter performance reflects continued strength in infrastructure demand across all our end markets,” Tan said in the statement.
The shares gained about 1% in late trading after the report was released. They had closed at $598.65 in New York.
The company’s semiconductors and software go into a wide range of products, which has also helped make it more stable. It supplies chips to Apple Inc. for the iPhone and high-end networking chips used in the data centers of companies such as Amazon.com Inc.
Broadcom shares had outperformed those of its chip peers in 2022, though they’ve lost some of their luster this year. The stock is up 7% in 2023, compared with 18% for the benchmark Philadelphia Stock Exchange Semiconductor Index.
Broadcom, based in San Jose, California, also has branched out into enterprise software by acquiring security and mainframe capabilities. And it’s trying to extend that run with a $61 billion purchase of VMware Inc., a transaction announced in May. The two companies recently extended the time needed to complete the deal until May 26 as regulatory approval drags on.
In the first quarter, which ended Jan. 29, Broadcom’s profit was $10.33 a share, excluding some items. Revenue rose 16% to $8.92 billion. Analysts had predicted earnings of $10.16 a share and sales of $8.9 billion.
The company’s chip business had sales of $7.1 billion in the quarter, a gain of 21% from a year ago. That beat some estimates. Infrastructure software shrank 1% to $1.8 billion and fell short of projections.
The company hasn’t reported an overall year-over-year quarterly decline in revenue since 2013, an almost decade-long run that’s included several acquisitions.
The chip industry enjoyed a dramatic boom during the pandemic, when the work-from-home shift fueled demand for technology. In the long run, Tan has said that the market will return to annual growth of about 5% or less — sticking with a more conservative outlook than many of his peers.
(Updates with CEO remarks in fourth paragraph.)
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