Earnings Preview: Broadcom

| About: Broadcom Limited (AVGO)
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Broadcom (BRCM) is expected to report Q2 earnings after the market close on Tuesday, July 24, with a conference call scheduled for 4:45pm ET.


The consensus estimate is 67c for EPS and $1.95B for revenue, according to First Call. The company is looking to beat estimates for a third straight quarter. Broadcom said back in January it expects revenues between $1.9B-$2.0B. The adjusted product gross margin is guided to be roughly flat vs. Q1.

Analyst Views

Deutsche Bank said that while macro concerns re-emerged late in the quarter, the firm believes strength in 3G -- offset by 2G -- and a modest recovery in IP set-top box and network infrastructure chip demand allowed BRCM to meet its revenue guidance range of up 4%-9% quarter-over-quarter. Specifically, Deutsche Bank is modeling pro-forma EPS/revenue of 68c/$1.95B and Networking up by +20% quarter-over-quarter. The firm estimates Mobile & Wireless flat quarter-over-quarter, Broadband +10% quarter-over-quarter and Other down -8% quarter-over-quarter. Deutsche sees a seasonal uptick in wireless partially offset by macro conditions. For Q3 DB is modeling pro-forma EPS/revenue at 78c/$2.09B, roughly in-line with the Street at 77c/$2.11B, driven by seasonal strength in Mobile & Wireless and partially offset by soft macro demand.

Key focus items: Connectivity market share; 3G baseband ramp; Channel inventory trend and margins. Consensus for 2012: $2.93 on $8.09B in revenue. Consensus for 2013: $3.16 on $9.01B in revenue.