Companies are pouring money into the infrastructure required for hybrid work, giving Broadcom a leg up over competitors in PC and smartphone markets.
The organization manufactures chips for wifi modems, data centers, and routers. Broadcom currently counts Apple as one of its major customers. It stands to benefit from the global rollout of 5G as well as its diversification into the software market.
Although shares in Broadcom have plummeted over 20 percent this year, the stock saw a 3 percent after the announcement of the most recent quarterly results.
Broadcom expects growth
The organization’s revenue rose 21 percent to $8.93 billion in the fourth quarter, which ended on October 30th. On average, analysts had expected Broadcom to bring in $8.9 billion.
As supply chain problems eased, semiconductor revenue saw a 26 percent increase. Broadcom’s earnings stand at $10.45 per share, well above the $10.28 per share expected.
As for the foray into software, Broadcom made a big move by acquiring VMware. The deal recently came under scrutiny in the UK.
Concerns
VMware’s partners and customers have voiced concerns about the organization’s legacy of innovation dying with Broadcom’s acquisition. Regulators worldwide are investigating the deal. The Federal Trade Commission in the United States is over five months into a second inquiry that began in July.
The second phase has no deadline and typically focuses on transaction details. The acquisition will have to wait until the investigation is concluded.
Broadcom CEO Hock Tan wrote a letter to VMware customers promising that his business would continue to fund VMware’s research and development. Tan noted that Broadcom had 19,000 patents and spent $5 billion on R&D in 2021.
Still, Broadcom spent less than VMware on R&D as a percentage of revenue, which is how companies traditionally report and show their R&D commitment.
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