Broadcom Revenue Increases on Smart-Phone Chip Demand

Whereas some giant phone makers are experiencing low sales and subsequently low profits, others are celebrating increased sales and overall profits. There in falls Broadcom Corp that is celebrating higher quarterly revenues.

Impressive Quarterly Results

On Tuesday last week, Broadcom Corp reported an increased quarterly earning and revenue attributing it to robust and strong demand for its chips that are widely utilized in a number of smart phones. Apple Inc’s smart phones make use of chips manufactured by Broadcom Corp and the increased demand for iPhone’s has resulted in a corresponding increase in Broadcom’s sales. What got me thinking however was Broadcom’s current quarter revenue projections that supersedes what analysts had projected? The manufacturer of chips that serve electronic products like set-top boxes and broadband equipment projected its earnings beating analysts’ expectations as it falls back on its impressive performance and hopes to sustain the impressive sales.

Increased Chip Demand

However, analysts were upbeat that Broadcom’s major advantage has been its access to current market preferable phones such Apple’s iPhone and iPad tablet computer that are using its chips. The impact of this super phones and gadgets cannot be under estimated and the fact that Broadcom has access to them contributes to a large extent in its superb earnings. Other than Apple Inc’s smart phones, the company, according to analysts has also benefitted from the market share it has been able to garner from companies such as Samsung and Nokia beating its rivals in the chips business such as Qualcomm Inc and Texas Instrumentals Inc to report impressive profit indices and earnings. As at the announcement on Tuesday last week, the company’s shares went up by a margin of 0.85% to peak at $37.85 in the extended trade after the markets closed with its share pegged at $37.53 on NASDAQ. However, analysts further said that the impressive trading was facilitated in a larger extent by the fact that investors had been keen on better performance and had pushed its shares by an increase of 12% from early July as they were hoping it would announce better results.

New Products

With its impressive results, Broadcom stated that it will be launching its new products in the current quarter, giving projected third quarter revenues ranging from $1.7 billion to $1.8 billion. The projected revenues are way above what analysts had expected the company would garner in the third quarter, with their estimates placing it at $1.67 billion. According to Broadcom, its profits went up to about $278 million from $13 million in 2009.  On the other hand, its revenues went up to $1.6 billion from $1.04 billion in 2009 and were also above what analysts had projected at $1.59 billion. Analysts are keen to see what happens in the future as they determine that as it is currently, it is a bit hard to project the company’s results given its solid indications.

It remains to be seen what analysts will have to say, if they can poke any holes in the projected earnings or not, one thing is clear however, Broadcom is performing impressively than hoped.

Leave a Reply

Your email address will not be published. Required fields are marked *