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Avago’s Revenues Increase 36.72% Year-over-Year in 3Q15

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Oct. 22 2015, Updated 11:04 a.m. ET

3Q15 results

On August 26, 2015, Avago (AVGO) announced its 3Q15 results and declared revenues of $1.73 billion, a 7.49% increase compared to 2Q15 and a 36.72% increase compared to 3Q14. Net income for 3Q15 was $240 million, and EPS (earnings per share) was $0.84.

In contrast, Avago’s net income in 2Q15 was $344 million with an EPS of $1.21, and net income in 3Q14 was -164$ million with an EPS of $0.65. In comparison, peer companies like Broadcom (BRCM) and Altera (ALTR) reported revenues of $2.10 billion and $414 million, respectively, in 2Q15.

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Avago’s gross margin and operating expenses

  • Gross margin for 3Q15 was $884 million, or 51% of net revenue. In comparison, gross margin in 2Q15 was $846 million, or 52% of revenue, and gross margin in 3Q14 was $393 million, or 31% of revenue.
  • Operating expenses in 3Q15 were $585 million. Operating expenses were $428 million in 2Q15 and $555 million in 3Q14.
  • Operating income was $299 million, or 17% of net revenue, in 3Q15. Operating income in 2Q15 was $418 million, or 26% of revenue, and operating income in 3Q14 was -$162 million, or 13% of net revenue.
  • Avago’s cash balance at the end of 3Q15 was $1.4 billion, compared to $2.5 billion in 2Q15. Avago generated $592 million in cash from operations and spent $148 million in capital expenditures in the same period.

Hock Tan, President and Chief Executive Officer of Avago, said, “In contrast to the recent volatility and uncertainty in equity markets, our market fundamentals have been relatively stable and I am pleased with our third quarter revenue and earnings performance.”

Tan also said, “Led by strong seasonal growth in our wireless segment, and stable performance from our enterprise storage, wired and industrial segments, we expect solid sequential revenue growth to sustain in the fourth quarter.”

Avago constitutes 0.18% of the SPDR S&P 500 ETF (SPY) and 0.80% of the Technology Select Sector SPDR ETF (XLK).

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