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Broadcom (NASDAQ: AVGO) has plunged 7.3% after hours, it still beat profit estimates, but fell short of the revenue consensus despite a double-digit gain and updated its forecasts, anticipating a "general slowdown in demand."
Revenues grew 10% overall, as infrastructure software revenues more than tripled, more than offsetting the decline in core chip solutions.
Gross margin increased 540 basis points to 72% and net income was $ 2.33 billion, compared with $ 2.24 billion.
Geopolitical uncertainties and export restrictions imposed on a major customer are stifling demand, said CEO Hock Tan. "As a result, our customers are actively reducing their inventory and we are adopting a conservative attitude for the rest of the year."
Net income by segment: semiconductor solutions, $ 4.09 billion (down 10%); Infrastructure software, $ 1.4 billion (up 216%); Intellectual property licenses, $ 16 million (down 47%).
For fiscal year 2019 (ending November 3rd), we are now moving towards a net business turnover of $ 22.5 billion (slight consensus at $ 24.33 billion) and a nonconforming operating margin GAAP 52.5%. Capex is seen at around $ 500 million.
Cash flow from operations was $ 2.67 billion; it used $ 1.33 billion for share buybacks and eliminations. Cash and cash equivalents were $ 5.33 billion compared to $ 5.09 billion last quarter.
Conference call at 5 pm ET.
Previously: Broadcom EPS beat $ 0.03, revenue short (June 13, 2019)
Press release
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