Broadcom forecasts current-quarter revenue largely above estimates on higher demand for components that power data centers, while the launch of Apple iPhones will boost its wireless business.
Revenue from enterprise storage business jumped 70 percent to $1.253 billion in the quarter as the acquisition of Brocade helped drive sales gains at the unit.
Broadcom’s wireless business, which makes chips for Wi-Fi, Bluetooth, and GPS connectivity, reported flat revenue to $1.288 billion.
Broadcom’s wired infrastructure unit, which makes components used in telecommunication networks, posted a 4 percent rise from a year earlier to $2.297 billion.
Broadcom’s wired infrastructure unit contributes 45 percent of its total revenue, while 25 percent comes from wireless infrastructure and the another 25 percent comes from enterprise storage and the balance 5 percent comes from industrial areas.
“More than half our consolidated revenue … is benefiting from strong cloud and enterprise data center spending,” Chief Executive Officer Hock Tan said on a post-earnings call with analysts.
“This, coupled with a seasonal uptick in wireless, will drive our forecast revenue in the fourth quarter.”
The company expects a ramp at its North American customer – which analysts identified as Apple – to drive a 25 percent rise in wireless revenue from the previous quarter, although it may be down in single-digit percentage compared with a year earlier. Apple is set to unveil its new iPhones this week.
Tan, who has transformed Broadcom into a $100 billion behemoth through a series of acquisitions, surprised Wall Street in July with his move to acquire software maker CA Technologies for $19 billion.
Tan said he planned to target the company’s enterprise customers with Broadcom’s offerings including server and storage connectivity products.
The CA deal comes after U.S. President Donald Trump blocked Broadcom’s $117 billion offer to buy Qualcomm on national security grounds.
Broadcom’s revenue was $5,063 million, an increase of 1 percent from $5,014 million in the previous quarter and an increase of 13 percent from $4,463 million in the same quarter last year.
Gross margin of Broadcom was $2,619 million, or 51.7 percent of net revenue, against $2,551 million, or 50.9 percent of net revenue, in the prior quarter, and $2,149 million, or 48.2 percent of net revenue, in the same quarter last year.
Operating expenses of Broadcom reached $1,280 million from $1,350 million in the prior quarter and $1,501 million in the same quarter last year.
Operating income was $1,339 million, or 26.4 percent of net revenue, from $1,201 million, or 24.0 percent of net revenue, in the prior quarter, and $648 million, or 14.5 percent of net revenue, in the same quarter last year.