Broadcom lifts dividend after Q4 in line with lowered expectations

Broadcom, which completed its buy of Symantec for USD 10.7 billion in November, has increased its quarterly dividend by 23 percent to USD 3.25, after reporting revenues in line with expectations and record profitability for the full year despite a challenging market backdrop, CEO Hock Tan said. The company had lowered its revenue guidance in June by USD 2 billion on “anticipated headwinds from wireless”, and export restrictions on one of the company’s largest customers, Huawei. 

Looking ahead to 2020, it sees revenues going back somewhat to their previous expected levels, to USD 25 billion, plus or minus USD 500 million, up 11 percent from the fiscal year 2019 at the midpoint of guidance. Adjusted EBITDA is expected to expand by over USD 1 billion to USD 13.75 billion, plus or minus USD 250 million. 

“Looking to fiscal 2020, we remain well-positioned (…) and continue to believe that our core semiconductor business is bottoming and will return to year over year growth in the second half of our fiscal year. In addition, we expect to benefit from the integration of the Symantec Enterprise Security business into what is otherwise expected to be a stable infrastructure software segment in fiscal 2020," Tan said. The CEO noted that while the company’s semiconductor solutions segment continued to work its way through a cyclical correction, this was offset by Broadcom’s infrastructure software segment. The company will focus capital returns next year on cash dividends, with excess cash going towards paying down debt.  

Revenues for the company’s Q4 to 3 November, which do not yet include any contribution from Symantec, lifted 6.1 percent from the year before to USD 5.776 billion, with full-year revenues up 8 percent to USD 22.597 billion. The net profit rose to USD 847 million or USD 1.97 per diluted share, from the previous quarter’s 715 million and 1.71 per diluted share, but fell from last year’s 1.115 billion and 2.64 per share. The adjusted EBITDA meanwhile increased year-on-year to USD 3.165 billion from 3.018 billion. For the full year, the net profit went to USD 2.724 billion from 12.259 billion, while the adjusted EBITDA went to USD 12.579 billion from 11.080 billion.

Cash from operations went a bit higher sequentially to USD 2.479 billion from 2.419 billion, though it was off from the 2.635 recorded the year earlier. Free cash flow went to USD 9.265 billion from 8.245 billion year-on-year, with the company’s cash position at the end of Q4 at USD 5.055 billion, from USD 5.462 billion in the third quarter.