Broadcom raises interim div by over 70% after strong Q4, FY results

Thursday 7 December 2017 | 09:48 CET | News
Broadcom raised its interim dividend by 72 percent quarter-on-quarter to USD 1.75 after revenues for its fourth quarter hit the high end of expectations and following a very strong fiscal 2017. The company said results from the quarter do not include any contribution from Brocade, whose acquisition was recently completed.

For the long term, Broadcom said it will continue to target annual revenue growth of 5 percent and that it will be raising its target for adjusted gross margin from greater than 60 percent to 65 percent and its adjusted operating margin from 45 percent to 47.5 percent. Broadcom will also be raising its long-term target for free cash flow from 35 percent to 40 percent of net revenue. 

Revenues for Q4 rose 17 percent from the year before to USD 4.844 billion while the gross margin went up to USD 2.383 billion (49.2% of revenues) from 2.171 billion (52.5%) the year earlier. Operating expenses were roughly flat quarter-on-quarter, going to USD 1.518 billion from 1.501 billion, though they declined from the year before’s figure of 1.790 billion. As a result, the operating profit more than doubled to USD 865 million or 17.9 percent of revenues, from 381 million or 9.2 percent year-on-year. The net result, which includes the impact of discontinued operations, moved to a profit of USD 671 million or USD 1.50 per diluted share, from a loss the year earlier of 668 million, or 1.59 per diluted share. 

For the full year, revenues from continuing operations lifted 33 percent to USD 17.636 billion, while the gross margin advanced to 8,509 billion (48.2%) from 5.940 billion (44.9%). The operating result increased to a profit of USD 2.493 billion from a loss the year earlier of 409 million. The net result, including the impact from discontinued operations, jumped to a profit of USD 1.894 billion or USD 4.27 per diluted share from a net loss of 1.861 billion or 4.86 per diluted share.  

Looking forward, Broadcom gave its guidance for continuing operations in the first quarter to 4 February, noting that fiscal 2018 will include an extra week compared to fiscal 2017, in Q1. The guidance includes some contribution from the acquired Brocade Fibre Channel Storage Area Networking business. Revenues are expected at USD 5.296 billion, give or take USD 75 million, with the gross margin seen at 47.75 percent, give or take 1 percent, and operating expenses forecast at USD 1.760 billion. Capex is expected at around USD 210 million.

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