Broadcom (AVGO) Q1 Earnings Report in Focus

The history of Broadcom Inc (NASDAQ:AVGO) dates back to 1991 when  Henry Samueli and Henry Nicholas co-founded Broadcom to produce semiconductor products. In 2016, Avago Technologies acquired Broadcom for $37 billion and the joint company was renamed Broadcom Ltd. Today, it is a leading chipmaker specialized in semiconductor and infrastructure software products and solutions.

The San Jose, California-based chip giant recently announced better-than-expected financial results for the first quarter. Broadcom posted earnings of $3.05 per share for the three months ended January 31, significantly higher than 74 cents per share in the comparable period of 2020.

Excluding items, the company reported an adjusted profit of $6.61 per share, above the consensus forecast of $6.56 per share. Revenue came in at $6.66 billion, up 14 percent from $5.86 billion in the year-ago quarter. Analysts on average were expecting Broadcom to report revenue of $6.62 billion.

If we look at the performance of key segments, Broadcom’s chip sales in the quarter climbed 74 percent on a year-over-year basis to $4.91 billion but fell slightly short of $4.92 billion estimated by analysts. Comparatively, infrastructure software sales rose 26 percent to $1.75 billion, easily beating the consensus forecast of $1.67 billion.

Chief Executive Officer of Broadcom, Hock Tan expressed his satisfaction over the quarterly results saying, “This growth reflects the critical role our technology franchises play in this environment of accelerated digital transformation.”

Looking forward, Broadcom expects to report revenue of around $6.5 billion for the second quarter, better than the consensus forecast of $6.33 billion.

Meanwhile, Broadcom stock has gained significant value in recent months. The stock has advanced nearly 60 percent during the past 12 months, as the extended work-from-home trend during the pandemic fueled the demand for its chips used in data centers and servers.

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