Broadcom (AVGO) Beats On Q2 Earnings & Revenues, Shares Up
Zacks Investment Research | Jun 01, 2017 11:20PM ET
Broadcom Limited (NASDAQ:AVGO) reported impressive second-quarter fiscal 2017 results. Earnings (excluding stock-based compensation) surged almost 46% from the year-ago quarter and 1.7% sequentially to $3.69 per share.
Earnings (including stock-based compensation) were $3.31 per share in the reported quarter, beating the Zacks Consensus Estimate by 29 cents.
Non-GAAP revenues from continuing operations were $4.201 billion, which increased 17.9% from the year-ago quarter and 1.3% on a sequential basis. The figure was better than management’s guidance and also slightly better than the Zacks Consensus Estimate of $4.105 billion.
Shares jumped 5.4% in pre-market trading. Notably, Broadcom has outperformed the S&P 500 index on a year-to-date basis. The company’s return of 32.7% is higher than the index’s gain of 8.9%.
Segment Revenues
Wired Infrastructure revenues (50.3% of total revenue) were $2.115 billion, up 2.5% from the year-ago quarter. Sequentially, revenues increased 1.3%, faring better than management’s guidance.
Revenues were driven by seasonally strong demand for broadband access and set-top box products as well as growth in enterprise networking.
Wireless Communications (27.4%) revenues were up 45.2% year over year but declined 2.1% quarter over quarter to $1.150 billion. Per management, the sequential decline was better than expected due to stronger-than-anticipated end-market demand.
Enterprise Storage (16.9%) revenues increased 35.6% from the year-ago quarter and 0.7% sequentially to $712 million. Revenues benefited from strong demand for the company’s Hard Disk Drive (HDD), SSD, SaaS and RAID products, offset by a seasonal decline in Fibre Channel shipments.
Industrial & other (5.3%) revenues increased 23.1% year over year and 24.4% sequentially to $224 million primarily driven by higher revenues from Intellectual Property (IP) in the quarter. Management noted that re-sales of its industrial products was significantly strong, which is anticipated to continue going forward.
Operating Details
Gross margin (including stock-based compensation) expanded 310 basis points (bps) on a year-over-year basis and 70 bps sequentially to 62.8% due to favorable product mix.
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