Broadcom Earnings: Margins Shrink as Costs Rise, Profit Falls

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S&P 500 (NYSE:SPY) component Broadcom Corporation (NASDAQ:BRCM) reported its results for the third quarter. Broadcom manufactures semiconductors for wired and wireless communications.

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Broadcom Corporation Earnings Cheat Sheet

Results: Net income for the semiconductors-communications fell to $220 million (38 cents per share) vs. $270 million (48 cents per share) a year earlier. This is a decline of 18.5% from the year-earlier quarter.

Revenue: Rose 8.7% to $2.13 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Broadcom Corporation fell short of the mean analyst estimate of 43 cents per share. It beat the average revenue estimate of $1.95 billion.

Quoting Management: “Broadcom delivered record quarterly revenue and operating cash flow in Q3 driven by strength across all of our business segments,” said Scott McGregor, Broadcom’s President and Chief Executive Officer. “We also achieved key company milestones including our first quarter above $2 billion in revenue and our first quarter of Mobile and Wireless revenue above $1 billion. Despite challenging market conditions, Broadcom’s product pipeline is stronger than ever, positioning us for continued success in the communications semiconductor space.”

Key Stats:

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 6 cents, and in the first quarter, it was ahead by 5 cents.

Revenue has now increased for three quarters in a row. In the second quarter, revenue rose 9.7% to $1.97 billion while the figure rose 0.6% in the first quarter from the year earlier.

Net income has dropped 22.1% year-over-year on average across the last five quarters. Performance was hurt by a 61.4% decline in the first quarter from the year-earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 55 cents a share to 54 cents over the last sixty days. For the fiscal year, the average estimate has moved up from $1.86 a share to $1.97 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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