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Earnings Outcomes: Broadcom inventory rises after earnings beat, dividend hike, slight software program miss

Broadcom Inc. shares ticked higher in the extended session Thursday after the chip and software company reported quarterly earnings and an outlook that topped Wall Street estimates — except for a slight miss on software revenue — and hiked its dividend.

Shares of Broadcom
AVGO,
+2.43%
rose 2% after hours, following a 2.4% rise in the regular session to close at $531.08.

Broadcom reported fiscal fourth-quarter net income of $3.31 billion, or $7.83 a share, compared with $1.91 billion, or $4.45 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation and other items, were $10.45 a share, compared with $7.81 a share in the year-ago quarter.

Revenue rose to $8.93 billion from $7.41 billion in the year-ago quarter, as chip sales rose 26% to $7.09 billion from the year-ago period, and infrastructure software sales increased by 4% to $1.84 billion.

Analysts surveyed by FactSet had expected earnings of $10.28 a share on revenue of $8.9 billion. The Street also forecast chip sales, on average, of $7.04 billion and infrastructure software sales of $1.86 billion.

“As we look into fiscal 2023, our increased R&D investments during the preceding years position us to extend our leadership in next-generation products within the end markets we address,” said Hock Tan, Broadcom’s chief executive, in a statement.

For the first quarter, Broadcom sees revenue of about $8.9 billion, compared with the Street’s estimate of $8.78 billion.

“Consistent with our commitment to return cash to shareholders, we will resume our authorized share-repurchase programs for the remaining $13 billion, and we are increasing our quarterly common stock dividend by 12% to $4.60 per share for fiscal year 2023,” said Kirsten Spears, Broadcom’s chief financial officer, in a statement.

Last year, Broadcom promised that it would follow through on $10 billion in buybacks by the end of 2022.

Last quarter, Tan defended his positive outlook and said that end-market demand was “solid” for the rest of the year, forecast revenue of about $8.9 billion for the fiscal fourth quarter, and said he still expected the acquisition of VMware Inc.
VMW,
+0.97%
to close before October 2023.

In late May, Broadcom announced its $61 billion in cash and stock bid for VMware, a big addition to its software holdings, which also include Symantec’s enterprise security business and CA Inc. Then, in July, the company said its software head, Tom Krause, was leaving the company in the middle of the deal he helped bring about to go head the private company formed from a combined Citrix Systems Inc. and Tibco Software.

Year to date, shares of Broadcom have declined 20%. In comparison, the S&P 500 index 
SPX,
+0.75%
has fallen 17%, the tech-heavy Nasdaq Composite index 
COMP,
+1.13%
is down 29%, and the PHLX Semiconductor Index
SOX,
+2.67%
  has dropped 31%.

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