Earnings Preview: Broadcom

| About: Broadcom Limited (AVGO)

Broadcom (BRCM) is expected to report Q1 earnings after the market close on Tuesday, May 5, with a conference call scheduled for 4:45 pm ET.


The consensus estimate is 54c for EPS and $1.08B for revenue, according to First Call. Guidance from Broadcom's last conference call is for Q1 revenue of $1.7B-$1.8B, with an adjusted product gross margin roughly flat from a Q4 level of 50.6%. Management said they saw revenue from broadband communications, wireless down, and infrastructure networking sales roughly flat in Q1. Expectations are quite high for Broadcom headed into the release given the company's exposure to the Apple (NASDAQ:AAPL) iPhone. In fact, Broadcom shares rallied more than 6% on April 25 in response to stronger than expected earnings from Apple. The whisper number for Broadcom's Q1 EPS is 56c, one cent ahead of consensus.

Analyst Views

Looking towards Q2, Deutsche Bank sees some wireless risk given the choppy Q2 outlook from Mobile peers. However, Deutsche Bank thinks incremental upside in other segments should provide an offset. Deutsche Bank maintains a Buy rating on Broadcom as it believes the near-term fears are reflected in the stock and 2H catalysts remain. Consensus for Q2: 65c on $1.97B in revenue. Consensus for FY12/FY13: $2.85/$3.17 on $8.14B/$9.03B in revenue.