- Chip tech company does better on revenues and earnings
- Investors bet on future cash returns from dividends and buybacks
- CEO predicts strong Q4 on $31 billion order backlog
Chip maker Broadcom (AVGO:NASDAQ) handed investors $3.2 billion during a busy third quarter that outstripped analyst estimates on both revenue and earnings.
The semiconductor company reported a 25% year-on-year jump in revenue to $8.5 billion, while EPS (earnings per share) hit $9.73 allaying fears that spending on internet infrastructure is slowing.
The figures came versus the consensus of $8.4 billion and $9.56 respectively, although free cash flow was a little light at $4.31 billion against $4.55 billion anticipated.
Broadcom’s record results were driven by robust demand across cloud, service providers, and enterprise. ‘From our vantage point, infrastructure spending is still very much holding,’ said Hock Tan, president and CEO of Broadcom, on a conference call with analysts. ‘It’s true end demand.’
INVESTORS BET ON MORE OF THE SAME
‘We expect solid demand across our end markets to continue in the fourth quarter, reflecting continued investment by our customers of next generation technologies in data centres, broadband, and wireless.’
Backing up Tan’s optimism was Broadcom’s backlog of orders, which can’t be cancelled, which expanded to $31 billion. Broadcom sees fourth quarter revenue of $8.9 billion, versus the consensus of $8.7 billion.
This will leave investors hopeful that cash returns will continue going forward and lift the share price. The company returned a total of $3.2 billion to shareholders in the quarter, split between $1.7 billion of dividends and $1.5 billion of share buybacks.
Broadcom shares rallied nearly 2% in after-hours trading overnight, up $9.26 to $501.27, lifting the company’s market capitalisation back over the $200 billion mark.
