Broadcom tips wireless revenue growth to slow - Mobile World Live

Broadcom tips wireless revenue growth to slow

16 MAR 2018

Broadcom warned wireless revenue in its fiscal Q2 2018 is expected to decline, after reporting the figure in its fiscal Q1 nearly doubled year-on-year.

Revenue of $2.2 billion in fiscal Q1 (the three months to 4 February) was up 88 per cent on fiscal Q1 2017 following a ramp in customer shipments in the recent period. In an earnings call, CEO Hock Tan attributed the bump to an uptick in orders from a “large North American smartphone customer”, widely believed by analysts to be Apple.

Tan said shipments to the unnamed customer are expected to “trend down sharply” in fiscal Q2, but noted the decrease would be partially offset by an increase in shipments to “support the ramp of next generation flagship phone at a large Korean smartphone customer”.

While the company is expecting a “much larger than typical seasonal decline” in wireless revenue, Tan said year-on-year growth in fiscal Q2 is still expected to be in the “double digits”.

Wireless revenue made up 41 per cent of Broadcom’s total of $5.3 billion in its fiscal Q1 2018. Overall net income of $6.6 billion surged from $252 million in fiscal Q1 2017, driven primarily by a massive boost from changes to the US tax code.

Acquisition outlook
Broadcom’s earnings call came just after the company’s hostile bid to acquire Qualcomm was squashed by US President Donald Trump.

CFO Tom Krause said the company doesn’t see the decision as “putting any constraints on our ability to pursue acquisitions more broadly going forward”. He noted, however, Broadcom will likely pursue smaller deals in the future.

“Qualcomm was clearly a unique and very large acquisition opportunity. Given the maturity of the industry, the consolidation it has seen and our relative size now, our future acquisitions are much more likely to be funded with cash available on our balance sheet and without the need to flex the balance sheet much beyond our current financial policy of two-times net leverage.”

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Diana Goovaerts

Diana joins Mobile World Live as its new US Editor, reporting on infrastructure and spectrum rollouts, regulatory issues, and other carrier news from the US market. Diana comes to GSMA from her former role as Editor of Wireless Week and...

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