Broadcom forecast signals strong corporate tech spending
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BROADCOM gave an upbeat sales forecast for the current period, indicating that demand remains strong from corporate customers and the cloud infrastructure industry.
Revenue in the fiscal first quarter will be about US$8.9 billion, Broadcom said in a statement on Thursday (Dec 8), compared with an average analyst estimate of US$8.8 billion.
The forecast continues a run of Broadcom outperforming the broader chip industry. Chief executive officer Hock Tan’s choice of end markets — such as making key components for Apple’s iPhone and the chips used in Amazon.com data centres — has helped insulated the company from a sharp slowdown elsewhere.
Broadcom, based in San Jose, California, also has branched out into enterprise software by acquiring security and mainframe capabilities. And it’s trying to extend that diversification with a US$61 billion purchase of VMware in a transaction announced in May.
The shares rose as much as 2.4 per cent to US$543.83 in late trading after the earnings report was released. Though the stock was down 20 per cent in 2022 through the close, that’s significantly better than the performance of most chip peers this year.
In the fourth quarter, which ended Oct 30, Broadcom’s profit was US$10.45 a share, excluding some items. Revenue rose to US$8.93 billion. Analysts had predicted earnings of US$10.25 a share and sales of US$8.9 billion.
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Broadcom’s report follows that of rival Marvell Technology, which raised concerns about slowing demand from data centre owners and a weak Chinese market.
Tan has predicted that the chip business will decelerate to historical growth rates of about 5 per cent or less. That’s well below more than 20 per cent that the company achieved in 2021 and 2022 but in line with what analysts are predicting for Broadcom for 2023. BLOOMBERG
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