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How Are Broadcom’s Revenues Performing?

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Dec. 11 2018, Updated 2:20 p.m. ET

Broadcom’s revenue in the fourth quarter

Semiconductor giant Broadcom (AVGO) has been posting stable revenue. It operates in the communications infrastructure sector, where exposure is high in the wired business.

In the fourth quarter of fiscal 2018, Broadcom achieved quarterly revenue of nearly $5.45 billion, up 12% YoY (year-over-year) from $4.84 billion and almost 8% higher than its previous quarter’s revenue of $5.06 billion.

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Revenue drivers by segment

Broadcom earned ~41% of its revenue from its Wired Infrastructure segment, which makes components used in telecommunications networks. The company earned $2.2 billion from its Wired segment in the fourth quarter of fiscal 2018, a rise of 3% YoY. Broadcom’s Wireless segment, which makes chips for Wi-Fi, Bluetooth, and GPS connectivity, accounted for nearly 31% of its revenue.

The Wireless segment, which earns a large portion of its revenue from Apple, posted a 5% rise in revenue to roughly $1.7 billion in the fourth quarter of fiscal 2018. Its chip sales were also better than analysts’ expected numbers of $1.63 billion despite fears of reduced iPhone demand and guidance cuts by Apple’s suppliers, including Qorvo (QRVO). Some suppliers, including Lumentum Holdings (LITE), Qorvo, Universal Display, Cirrus Logic, and Skyworks Solutions (SWKS), were also asked to lower their production levels. Broadcom supplied eight components for Apple’s 2017 iPhone models.

Broadcom’s revenue rose mostly on the back of higher demand for components that power data centers. Revenue from its Enterprise Storage segment, which accounts for 23% of its total revenue, rose a significant 96% YoY in the quarter driven by the acquisition of Brocade, which helped drive sales growth. Broadcom’s revenue in its Industrial segment, which accounts for 5% of its revenue, rose 5.8% YoY to $272 million.

However, during the fourth quarter, the company announced that it would now be operating with two primary business segments: Semiconductor Solutions and Infrastructure Software.

The outlook for fiscal 2019 revenue

Broadcom expects its fiscal 2019 revenue to be $24.5 billion, mainly driven by strong cloud storage capacity, enterprise data center spending, and growth in its wireless business. Its acquisition of CA Technologies, which closed in early November, is expected to bolster its revenue amid weakness in the semiconductor industry.

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