Broadcom Limited (NASDAQ:AVGO) Q3 2016 Earnings Conference Call - Final Transcript

Sep 01, 2016 • 05:00 pm ET

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Broadcom Limited (NASDAQ:AVGO) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Welcome to Broadcom Limited's Third Quarter Fiscal Year 2016 Financial Results Conference Call. At this time for opening remarks and introductions, I would like to turn the call over to Ashish Saran, Director of Investor Relations. Please go ahead, sir.

Executive
Ashish Saran

Thank you, operator and good afternoon, everyone. Joining me today are Hock Tan, President and CEO; and Tom Krause, acting Chief Financial Officer of Broadcom Limited.

After market closed today, Broadcom distributed a press release and financial tables describing our financial performance for the third quarter of fiscal year 2016. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom's website at www.broadcom.com. This conference call is being webcast live, and a recording will be available via telephone playback for one week. It will also be archived in the Investors section of our website at broadcom.com.

During the prepared comments section of this call, Hock and Tom will be providing details of our third quarter fiscal year 2016 results, background to our fourth quarter fiscal year 2016 outlook and some commentary regarding the business environment. We will take questions after the end of our prepared comments.

(Forward-Looking Cautionary Statements)

At this time, I would like to turn the call over to Hock Tan. Hock?

Executive
Hock Tan

Thank you, Ashish. Good afternoon, everyone. Well, we did deliver very strong results for our third fiscal quarter 2016, with revenue at $3.8 billion, up 7% sequentially and above the midpoint of guidance. Earnings per share of $2.89 grew by more impressive 14% sequentially as we benefited from the leverage inherent in our business model. I am rather pleased with our execution on integrating classic Broadcom businesses and divesting several of its non-core businesses we had identified as assets held for sale. We have also made rapid progress in driving towards our target business model within the first two quarters after closing the acquisition, but we are not yet done with the full realization of expected acquisition-related cost synergies.

Let me now turn to a discussion of our third quarter segment results starting with wired. In the third quarter, wired revenue came in at $2.07 billion and the wired segment represented 54% of total revenues. Revenue for this segment was flat sequentially as the strong demand we had seen for wired products in the prior quarter continued to sustain into the third quarter. This was slightly weaker than we have expected due to lower than expected set-top box product shipments because of supply constraints. However, the reduction in set-top box revenue was offset by growth in our ASICs, particularly in Ethernet switching and fiber optic shipments into the fiber-to-the-home applications.

We also benefited from strong demand for fiber-to-the-home products in our broadband access business, switching and routing ASSPs sustained as data center operators continue to upgrade their infrastructure. Our Jericho routing product family, which is enabling a whole new set of switching and routing platforms for our core customers had a strong ramp in this quarter. As we look