uploads///broadcom pixabay

Analyzing Broadcom’s Revenue Sluggishness in Q2

By

Jun. 16 2019, Updated 3:41 a.m. ET

Broadcom’s Q2 revenue

In the second quarter, Broadcom’s (AVGO) revenue rose 10% YoY (year-over-year) to ~$5.52 billion, missing analysts’ expectation of $5.68 billion. Its revenue fell 4.7% sequentially. Broadcom’s revenue declined YoY in the semiconductor solutions and IP (intellectual property) licensing segments, but improved in the infrastructure software segment.

Article continues below advertisement

Revenue drivers by segment

Broadcom’s infrastructure software revenue surged 216.1% YoY to $1.41 billion in the second quarter, fueled by its November 2018 acquisition of mainframe software company CA Technologies. However, its IP licensing revenue dropped 46.7% to $16 million. The company’s semiconductor solutions revenue, which comprised 74% of its total Q2 revenue, fell 9.9% YoY to $4.09 billion due to weak wireless revenue.

Broadcom’s wireless chip revenue was weak due to China’s slowdown and the soft demand for Apple’s 2018 iPhones. A cut in iPhone production reduced orders of radio frequency chips. However, Broadcom’s networking business is doing well, owing to cloud companies’ growing momentum and switching and routing chips’ healthy product cycles. The company expects its networking business to grow by a double-digit percentage in fiscal 2019.

Outlook

Due to weakness in its semiconductor solutions segment, Broadcom has cut its fiscal revenue guidance by $2 billion to ~$22.5 billion, comprising $17.5 billion from semiconductor solutions and ~$5 billion from infrastructure software. Analysts expect Broadcom to see revenue of $23.4 billion in fiscal 2019.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.