Summary
Broadcom Inc. reported strong revenue growth for the three fiscal quarters ended August 4, 2019, up 9% year-over-year to $16.82 billion. This growth was primarily driven by a significant increase in the Infrastructure Software segment, which more than doubled its revenue, largely due to the acquisition of CA Inc. The Semiconductor Solutions segment saw a slight revenue decline of 9%, impacted by a general slowdown in semiconductor demand. Net income attributable to common stock for the nine-month period was $1.88 billion, a substantial decrease from $11.14 billion in the prior year, largely influenced by the prior year's significant tax benefits related to the 2017 Tax Reform Act. The company's balance sheet reflects a substantial increase in goodwill and intangible assets, a direct result of the CA acquisition. Broadcom also announced a pending acquisition of Symantec's Enterprise Security business for approximately $10.7 billion, signaling continued strategic expansion. Financially, Broadcom generated strong operating cash flow of $7.22 billion for the nine-month period. The company significantly increased its long-term debt to $34.03 billion from $17.49 billion, primarily to finance the CA acquisition. Despite the increased debt, Broadcom continued to return capital to shareholders, paying $3.18 billion in dividends and repurchasing $5.00 billion in stock during the period. Investors should note the ongoing customer concentration, with Apple Inc. accounting for approximately 20% of net revenue, and the company's reliance on key distributors and contract manufacturers like TSMC. The pending Symantec acquisition will add further complexity and debt, requiring careful monitoring of integration and financial leverage.
Financial Highlights
56 data points| Revenue | $5.51B |
| Cost of Revenue | $2.48B |
| Gross Profit | $3.03B |
| R&D Expenses | $1.24B |
| SG&A Expenses | $410.00M |
| Operating Expenses | $2.17B |
| Operating Income | $865.00M |
| Interest Expense | $362.00M |
| Net Income | $715.00M |
| EPS (Basic) | $0.18 |
| EPS (Diluted) | $0.17 |
| Shares Outstanding (Basic) | 3.98B |
| Shares Outstanding (Diluted) | 4.18B |
Key Highlights
- 1Total net revenue increased by 9% to $16.82 billion for the three fiscal quarters ended August 4, 2019, compared to the prior year period.
- 2Infrastructure Software segment revenue surged by 212% to $3.96 billion, driven by the CA acquisition, while Semiconductor Solutions revenue decreased by 9% to $12.82 billion.
- 3Net income attributable to common stock decreased significantly to $1.88 billion from $11.14 billion, primarily due to large tax benefits in the prior year period related to the 2017 Tax Reform Act.
- 4Total assets grew to $69.77 billion from $50.12 billion, with a substantial increase in Goodwill ($36.69 billion from $26.91 billion) and Intangible Assets ($18.88 billion from $10.76 billion) due to acquisitions.
- 5Long-term debt more than doubled to $34.03 billion from $17.49 billion, largely to finance the CA Merger.
- 6The company generated $7.22 billion in cash from operating activities for the nine-month period.
- 7Broadcom announced a pending acquisition of Symantec's Enterprise Security business for approximately $10.7 billion, further expanding its infrastructure software portfolio.