Broadcom action falters after online earnings report

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Broadcom Inc. stocks hovered between slight gains and losses in the extended session Thursday after semiconductor and software firm’s quarterly results were in line with Wall Street estimates and its range of prospects confirmed the consensus of analysts.
Broadcom
AVGO,
-0.20%

stocks, which had fallen 3% after normal working hours, were up 1%. This follows a 0.2% drop during the regular session, where stocks closed at $ 308.89.

“The second quarter results were in line with our expectations and saw a limited impact from the effects of COVID-19,” said Hock Tan, president and chief executive officer of Broadcom, in a statement. “Looking ahead, our forecast for semiconductors in the third quarter reflects increased demand from cloud, telecom and business customers, offset by supply chain constraints and a substantial reset expected from the -wire. “
The company reported net profit for the second quarter of the fiscal year of $ 488 million, or $ 1.17 per share, compared to $ 691 million, or $ 1.64 per share, for the same period in ‘Previous exercice. Adjusted earnings were $ 5.14 per share compared to $ 5.21 per share a year ago.

Revenues reached $ 5.74 billion, compared to $ 5.52 billion in the same quarter of the previous year.
Analysts polled by FactSet had forecast earnings of $ 5.14 per share on revenue of $ 5.69 billion.
In March, Broadcom released its forecast for the year and forecast second quarter revenues of $ 5.55 billion to $ 5.85 billion.
The company reported $ 4.03 billion in chip sales and $ 1.72 billion in infrastructure software sales.
Analysts had forecast a 2.5% drop in chip sales to $ 3.99 billion and a 21% increase in sales of infrastructure software to $ 1.71 billion.
Broadcom forecasts revenue of $ 5.6 billion to $ 5.9 billion in the third quarter, while analysts forecast revenue of $ 5.79 billion.
Of the 31 analysts covering Broadcom, 24 have buy or overweight ratings and seven have hold ratings, as well as an average price target of $ 296.82, according to FactSet data.
Several analysts recently noted that Broadcom’s Symantec operations were under pressure from CrowdStrike Holdings Inc.
CRWD,
-2.16%,
which said profits on Tuesday as more companies that have to accommodate home workers due to the COVID-19 pandemic are turning to cloud-based cybersecurity rather than on-premise software.
Broadcom acquired Symantec’s corporate cybersecurity operations in late 2019 for $ 10.7 billion, leaving the remaining consumer businesses as NortonLifeLock Inc.
NLOK,
+ 1.88%.

During the conference call, Tan said that Symantec’s revenues increased 2% sequentially to more than $ 400 million for the quarter, but that revenue declines from Brocade Communications, the network equipment company acquired by Broadcom in 2017, would be down significantly as they were reduced inventory of channels.
“So with the result, we expect software segment revenues to decrease by about 7% sequentially in the third quarter,” said Tan.
Broadcom shares have gained 16% in the past 12 months. In comparison, the S&P 500
SPX,
-0.33%

increased 11%, the technology-intensive Nasdaq composite index
COMP,
-0.69%

is up 28%, and the PHLX Semiconductor Index
SOX,
+ 0.82%

is up 44% over this period.

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