With Qualcomm saga behind it, Broadcom tops estimates

(Reuters) - Broadcom Ltd’s (AVGO.O) quarterly results topped estimates on Thursday on robust demand for its chips from smartphone makers, at a time when investors are closely watching the company’s next moves after its bid for fellow chipmaker Qualcomm was blocked.

U.S. President Donald Trump blocked Broadcom’s $117 billion hostile bid for Qualcomm Inc (QCOM.O) earlier this week on national security concerns, and the company scrapped the offer on Wednesday.

Singapore-based Broadcom, however, said it would continue with its plans to redomicile to the United States, fueling expectations that the company would likely scout for smaller targets.

Broadcom’s shares were down 1.2 percent at $267.76 in extended trading on Thursday.

“The beat is moderating over time,” said Summit Insight Group analyst Kinngai Chan.

“Typically, Broadcom has to make acquisitions to drive the earnings. If the company is able to make two or three medium-size acquisitions, then I think the stock will move up again.”

Broadcom, whose WiFi chips are found in Apple Inc’s (AAPL.O) iPhone and most Android phones, was eyeing Qualcomm’s core baseband chips and license business that would significantly benefit from the rollout of 5G wireless technology.

Net income attributable to ordinary shares surged to $6.23 billion, or $14.62 per share, in the first quarter ended Feb. 4, from $239 million, or 57 cents per share, a year earlier.

The company, which announced a quarterly interim dividend of $1.75 per share, said it recorded a gain of $5.79 billion due to the recently enacted U.S. tax law.

Excluding items, the company earned $5.12 per share.

Net revenue rose to $5.33 billion from $4.14 billion.

Revenue from the wireless business, which includes WiFi chip supplies to smartphones, nearly doubled to $2.21 billion.

Analysts on average had expected earnings of $5.05 per share and revenue of $5.32 billion.