Broadcom (NASDAQ: AVGO) stock price plunged from an all-time high despite reporting stronger than expected financial results for the third quarter. The robust revenue growth is driven by healthy demand from telecom and cloud customers. Its third-quarter revenue of $5.82 billion topped analysts’ consensus estimate by $60 million.
Although its semiconductor solutions revenue of $4.21 billion dropped 4% year over year, infrastructure software revenue of $1.6 billion grew 41% from the past year period. Infrastructure software revenues now account for 28% of the total.
“We delivered third-quarter revenue results in-line with our expectations, driven by healthy demand from cloud and telecom customers, which more than offset the expected reset in wireless,” said Hock Tan, President, and CEO of Broadcom Inc.
The company has also generated robust cash growth during the third quarter. Its free cash flow of over $3 billion enlarged 33% from the past year period. The company has also lowered its debt by $1.9 billion and it plans to reduce additional debt by $3 billion in the fourth quarter this year. It paid a cash dividend of $3.25 per share, yielding around 3.7%. The company has raised dividends in the 9 consecutive years.
Broadcom stock price is up 11% so far this year, accelerating the full-year gains to 24%. Broadcom stock is currently trading around $340 at present, down from the 52-weeks high of $370 a share that it had hit early this week.
The company now expects fourth-quarter revenue in the range of $6.4 billion while adjusted EBITDA is likely to hit $3,744 million.
“Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in the enterprise,” said Hock Tan, President, and CEO.