(Reuters) - Broadcom Inc’s (AVGO.O) quarterly profit beat Wall Street estimates as demand for its networking chips and storage solutions from data centers more than made up for weakness in its wireless business.
The company said it expects wireless revenue to be flat or slightly down in the third quarter, from the second quarter, as growth in demand from a large North American smartphone customer will be offset by a decline in shipments to a Korean customer.
Most analysts believe that the North American customer is Apple Inc (AAPL.O), which accounted for a fifth of Broadcom’s revenue last year, and the Korean customer is Samsung Electronics Co Ltd (005930.KS).
However, Broadcom expects demand to remain healthy from cloud data centers and enterprise IT, Chief Executive Officer Hock Tan said on a call with analyst.
Broadcom, which was a U.S. company until it was bought in 2016 by Singapore’s Avago, redomiciled in April, weeks after U.S. President Donald Trump blocked its $117 billion offer to buy Qualcomm Inc (QCOM.O) on national security grounds.
Analysts see Broadcom’s moving headquarters as an attempt to buy U.S. companies without coming under the scrutiny of the Committee on Foreign Investment in the United States.
The chipmaker’s shares were down marginally in extended trading.
“I think the stock will trade in line to slightly underperform the semiconductor peer group unless they make a big acquisition or a few medium-size acquisitions,” said Summit Insights Group analyst Kinngai Chan.
The company’s net income attributable to common stock jumped nine-fold to $3.72 billion, or $8.33 per share, in the second quarter ended May 6.
Revenue from the company’s wired infrastructure business, which sells data center switching chips to customers such as Amazon.com Inc (AMZN.O) and switching ICs to the likes of Cisco Systems Inc (CSCO.O), jumped 46 percent to $2.30 billion.
Revenue from its wireless communications business, which offers RF filters and Wifi chips to smartphone makers, rose 26 percent to $1.30 billion versus a 41 percent rise in the first quarter. Broadcom had warned of a decline in this segment in April.
Excluding items, the company earned $4.88 per share, while analysts on average had expected $4.76, according to Thomson Reuters I/B/E/S.
Net revenue jumped 19.7 percent to $5.01 billion, above the average analyst estimate of $5.00 billion.
The San Jose, California-based company reiterated its current-quarter revenue forecast of $5.05 billion, plus or minus $75 million, in line with analysts’ estimates.
Reporting by Sonam Rai in Bengaluru; Editing by Maju Samuel