Thu, May 28, 1:34 PM
- In a presentation (.pdf) discussing their planned merger, Avago (AVGO -0.4%) and Broadcom (BRCM -2.6%) state they're aiming for a 40% long-term op. margin, up from the 30% collectively possessed by the companies today. Gross margin is forecast to rise to 60% from a current 57%, and R&D and SG&A spend respectively fall to 16% and 4% of revenue from 20% and 7%.
- Avago and Broadcom, who have $15.1B in revenue between them, are only forecasting a 5% long-term revenue CAGR. However, Avago CEO Hock Tan states the outlook is "probably conservative."
- Avago plans to partly finance the $17B cash portion of the deal via $9B worth of new debt. The post-merger company is expected to have $15.5B in debt and $1.3B in cash; Broadcom shareholders will have a 32% stake. The deal is expected to close in Q1 2016.
- Many potential product synergies exist. Among the possibilities: Wi-Fi/Bluetooth solutions that pair Broadcom's combo chips with Avago RF components; server/storage connectivity product lines featuring a mixture of Broadcom's Ethernet transceivers and switching chips and Avago's adapter cards and optical transceivers - Stifel thinks Mellanox (MLNX -0.3%) could be at risk here - and telecom equipment product lines that combine Broadcom's network processors and switching chips with Avago's optical components.
- Meanwhile, in its FQ2 report (issued in tandem with the merger announcement), Avago has guided for FQ3 revenue of $1.74B (+/- $25M), above a $1.68B consensus. The company reported a 66% Y/Y increase in FQ2 wireless chip revenue (aided by strong Apple/Samsung demand), along with 74% and 64% increases in wired infrastructure and industrial/other revenue (lifted by both organic growth and M&A).
Tue, Apr. 21, 5:35 PM
- In addition to beating Q1 estimates, Broadcom (NASDAQ:BRCM) is guiding for Q2 revenue of $2.1B (+/- $75M), above a $2.07B consensus. Strong Galaxy S6 sales could be partly responsible - Broadcom is believed to supply a Wi-Fi/Bluetooth combo chip and a GPS/sensor hub IC. Continued iPhone 6 and data center hardware strength (driven by Web/cloud demand) might also be factors.
- Q1 gross margin (non-GAAP) was 54.4%, -30 bps Q/Q and +250 bps Y/Y, and slightly below a guidance midpoint of 54.7%. However, GM is expected to rise to 56% (+/- 75 bps) in Q2.
- In addition, R&D/SG&A spend is expected to drop ~$15M Q/Q (+/- $10M). Thanks to Broadcom's baseband modem exit, R&D spend was down 15% Y/Y in Q1 to $539M, and SG&A spend 4% to $177M.
- $335M was spent on buybacks, providing a lift to EPS. Broadcom established a $1B 2015 buyback authorization last December.
- BRCM +5.5% AH to $46.38, slightly topping a 52-week high of $46.31.
- Q1 results, PR
Tue, Apr. 21, 4:08 PM
Mon, Apr. 20, 5:35 PM
Fri, Jan. 30, 1:29 PM
- 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.
- Q4 results/guidance, PR
Thu, Jan. 29, 4:08 PM
Wed, Jan. 28, 5:35 PM
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Dec. 9, 2014, 4:25 PM
- Broadcom (NASDAQ:BRCM) uses its 2014 analyst day to state it now expects Q4 revenue of $2.075B-$2.15B vs. prior guidance of $2B-$2.15B; consensus is at $2.09B. Strong iPhone combo chip sales are likely helping.
- The quarterly dividend has been hiked by $0.02/share to $0.14/share, good for a 1.3% yield at current levels. The next dividend will be declared in Q1.
- A $1B buyback authorization will exist for 2015. At current levels, it would be good for repurchasing 4% of shares. Broadcom has already been hinting at making bigger capital returns.
- Broadcom, whose stock compensation spend has occasionally been criticized, also promises to award 50% of its equity awards going forward through performance restricted stock units (PRSUs) vs. a prior 25%, and to link PRSU awards to "Broadcom's relative total shareholder return and relative earnings per share growth."
- In addition, Broadcom will now have an annual say-on-pay advisory vote, and won't include an annual share increase feature in future stock incentive plans.
- BRCM +1.2% AH. Analyst day webcast.
Nov. 26, 2014, 2:52 PM
- Chip stocks are outperforming after Analog Devices (ADI +5.2%) beat FQ4 estimates and offered in-line FQ1 guidance. The Philadelphia Semi Index (SOXX +1.9%) has made new highs.
- Notable gainers include many analog/mixed-signal and telecom IC firms: TXN +3%. LLTC +2.7%. SMTC +3.1%. ISIL +3.3%. SWKS +3.7%. AVGO +2.9%. OVTI +3.2%. FSL +3.1%. EZCH +2.5%. XLNX +2.3%. ALTR +2.1%. MX +4.3%. PMCS +2.7%. BRCM +2%.
- On its CC (transcript), ADI noted its telecom equipment chip sales are holding up well in spite of weak capex, aided by the fact its dollar content for 4G base stations is "at least 20% to 30% better" than for 3G base stations. The company also mentioned its lead times were stable in FQ4.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 31, 2014, 11:31 AM
- Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
- Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
- On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
- Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
- Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%. ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
- Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 22, 2014, 11:02 AM
- Broadcom (NASDAQ:BRCM) is above $40 after soundly beating Q3 estimates and providing better-than-feared Q4 guidance. On its CC (transcript), the company noted its Q3 beat was fueled by 16% Q/Q growth for its broadband/wireless connectivity chip reporting segment (67% of revenue).
- Wireless connectivity sales almost certainly got a lift (given Apple's numbers) from strong iPhone-related orders. The iPhone 6/6 Plus feature a Broadcom combo chip containing an 802.11ac Wi-Fi radio; 802.11ac parts carry higher ASPs than chips sporting 802.11n Wi-Fi radios (such as the one in the iPhone 5S).
- Broadband connectivity sales benefited from strong HD set-top IC sales (aided by share gains) for emerging markets designs. That appears to be giving a lift to set-top vendor/Broadcom client Arris (NASDAQ:ARRS) ahead of its Oct. 29 Q3 report.
- The networking/infrastructure chip segment's sales were roughly flat Q/Q at $651M, in-line with expectations. Data center and carrier-related sales both fell - soft telecom capex has taken a toll on many firms - while enterprise and home product sales rose. "Some pickup" is expected in carrier-related sales next year.
- During the Q&A, CEO Scott McGregor hinted Broadcom could announce new capital return plans during its Dec. 9 analyst day, given it now has over $2.7B in U.S. cash. $277M was spent on buybacks in Q3.
Oct. 21, 2014, 4:32 PM| Comment!
Oct. 21, 2014, 4:12 PM
Oct. 20, 2014, 5:35 PM
Jul. 23, 2014, 10:44 AM
- After "testing the market" to find a buyer for its money-losing baseband chip unit (previous), Broadcom (BRCM +0.8%) has decided to simply wind it down, CEO Scott McGregor stated on the Q2 CC (transcript).
- The chipmaker plans to cut 2.5K jobs (~1/5 of its workforce), and record $230M in charges (mostly cash-based) over the next 12 months. $164M worth of impairment/inventory charges were recorded in Q2.
- Broadcom's baseband ops are only expected to account for $50M-$60M of expected Q3 revenue of $2.1B-$2.25B. In Q2, they accounted for $84M of the company's $781M in mobile/wireless chip sales (combo chip-dominated).
- While mobile/wireless sales fell 8% Q/Q due to baseband weakness, infrastructure/networking sales grew 10% to $635M, aided by healthy Ethernet switching chip demand for data center and carrier hardware - heavy spending by Internet giants has bolstered the former market - and the displacement of internally-developed ASICs at switch OEMs.
- Broadband chip sales rose 12% Q/Q to $625M, thanks to healthy modem and set-top IC sales. Broadcom says it's gaining emerging markets set-top share, and also benefiting from the adoption of advanced features (multi-stream transcoding, extra tuners, the adoption of MoCA home networking).
- Prior Broadcom earnings coverage
Jul. 22, 2014, 5:26 PM
- Broadcom (NASDAQ:BRCM) expects Q3 revenue of $2.1B-$2.25B, in-line with a $2.19B consensus.
- Q2 product gross margin was 55%, +280 bps Q/Q and +290 bps Y/Y, and above guidance of 53.95%-54.95%.
- Q3 product GM is expected to be at 55% (+/- 75 bps), and opex is expected to decline $40M-$60M Q/Q (job cuts related to the baseband exit?).
- Q2 results, PR
BRCM vs. ETF Alternatives
Broadcom Corp is provider of semiconductors for wired and wireless communications. It provides a portfolio of SoCs that seamlessly deliver voice, video, data and multimedia connectivity in the home, office and mobile environments.
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