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It has been about a month since the last earnings report for Broadcom Inc. (AVGO). Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Broadcom Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Broadcom Tops Q4 Earnings Estimates, '19 Outlook Strong
Broadcom Limited has delivered stellar fourth-quarter fiscal 2018 results. Non-GAAP earnings of $5.85 per share marginally beat the Zacks Consensus Estimate of $5.58 per share. The figure improved 27.5% from the year-ago quarter and 17.5% sequentially.
Non-GAAP revenues from continuing operations were $5.448 billion, soaring 124% from the year-ago quarter and 8% sequentially. GAAP revenues came in at $5.444 billion. The figure marginally surpassed the Zacks Consensus Estimate of $5.401.
Decline in its large wireless customers and lower-than-expected demand in broadband business due to sluggish carrier spending is a headwind.
Segment Revenues
Wired Infrastructure revenues (41% of total revenues) totaled $2.2 billion, up 3% from the year-ago quarter. The upside was primarily driven by robust demand for cloud data centers and traditional enterprises.
Broadcom also announced that robust growth in networking and compute offloading in cloud data centers, and solid growth spending by enterprise IT positively impacted the segmental revenues. However, lower-than-expected demand in broadband business owing to sluggish carrier spending is a concern. As a result, revenues from broadband were down year over year.
Wireless Communications (31% of total revenues) was down 5% year over year to roughly $1.7 billion. Decline in large wireless customers remains a headwind.
Enterprise Storage (23% of total revenues) surged 96% from the year-ago quarter to $1.3 billion. The improvement was largely backed by contribution from the recently-acquired Brocade Fibre Channel switch business and strong enterprise IT spending.
Industrial & other (5% of total revenues) increased 5.8% year over year to $272 million. Excluding IP licensing revenues, Industrial business continued to grow, highlighting single-digit increase year over year.
Operating Details
Non-GAAP gross margin expanded 510 basis points (bps) on a year-over-year basis to 68.4%. The increase was buoyed by favorable product mix, driven by higher revenues from wired segment.