Chip maker and software infrastructure supplier Broadcom shares slipped after the company warned of weak demand for the products it sells to enterprise customers, and reshuffled its executive team.
(ticker: AVGO) fell 1.9% in the extended session, despite beating consensus estimates, and projecting better-than-expected fiscal first-quarter earnings.
Broadcom reported fiscal fourth-quarter net income of $1.32 billion, which amounts to $2.93 a share, compared with a net profit of $847 million, or $1.97 a share a year ago. Adjusted for items such as stock-based compensation, non-GAAP earnings were $6.35 a share. Sales rose to $6.47 billion from $5.78 billion a year ago.
The consensus estimate was for adjusted earnings of $6.25 a share, on sales of $6.43 billion.
“We concluded the year with strong fourth quarter results driven by continued demand for networking from cloud and for broadband from service providers as well as the significant ramp in wireless, even as enterprise demand remained soft,” Broadcom CEO Hock Tan said.
Broadcom’s chip business reported sales of $4.83 billion, a gain of 6% from the year-ago period. Infrastructure software sales rose 36% to $1.64 billion. Analysts had expected chip sales of $4.78 billion and software sales of $1.63 billion. Broadcom’s chip business sells products that help with wireless connections in iPhones, and makes chips for directing information flow inside data centers. The software division makes cyber security products, among other things.
The company said that it expected fiscal first-quarter sales of $6.6 billion, which came in above Wall Street estimates of $6.5 billion. The company’s fiscal first quarter ends in January.
Broadcom also said late Thursday that it had appointed Kristen Spears to the CFO job, and Charlie Kawwas to the role of chief operating officer. Broadcom’s current CFO, Tom Krause, will become president of the infrastructure software group.
The company said it was raising its target dividend by 11% to $3.60 a share, for each fiscal quarter in 2021.
Broadcom stock has gained 30% this year, as the PHLX Semiconductor index rose 50%.
Write to Max A. Cherney at [email protected]