- Following 16% Q/Q growth in Q3 (driven by iPhone-related orders), Broadcom's (BRCM +4.3%) broadband/connectivity chip sales only fell 2% Q/Q in Q4 to $1.475B, less than expected and driving the company's Q4 beat. Infrastructure/networking chip sales fell 4% Q/Q to $625M, in-line with expectations.
- On the CC (transcript), CEO Scott McGregor stated broadband/connectivity upside was "across the board, including set-top box, broadband access and particularly wireless connectivity." Wireless benefited not only from new phone launches, but also a growing mix of higher-ASP 802.11ac and 2x2 MIMO Wi-Fi combo chips.
- McGregor added Broadcom is "seeing significant customer interest in our 4x4 multiuser MIMO 5G WiFi chip targeted for retail routers, broadband access gateways and set-top boxes," and has scored its first wireless charging IC design win. Q1 broadband/connectivity segment sales are expected to be down Q/Q, in-line with seasonality.
- In infrastructure/networking, data center sales were stronger than enterprise (campus LAN) and carrier sales. Strong design win activity is claimed for both Broadcom's new 3.2Tbps StrataXGS Tomahawk switching chip. Segment sales are expected to be flat Q/Q in Q1.
- Q4 gross margin was 54.7%, +60 bps Q/Q and +240 bps Y/Y, and even with a guidance midpoint of 55% after factoring stock compensation. Thanks to job cuts and the baseband wind-down, R&D spend fell 18% Y/Y to $530M, and SG&A spend rose by just $1M to $173M. $104M was spent on buybacks.
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Q4 results/guidance, PR