Avago Technologies (AVGO) Stock Soars on Fourth Quarter Earnings Beat

Shares of Avago Technologies Ltd. (AVGO) were trading up +11.59 or +8.77 percent to $143.80 in Thursday’s premarket after the company announced fourth quarter earnings that beat analyst expectations late Wednesday. Avago Technologies stock closed at $132.21, down -0.68 or -0.51 percent in Wednesday’s regular trading session.

Dually headquartered in San Jose, California and Singapore, where the company is incorporated, Avago Technologies is a leading designer, developer and supplier of analog, digital and mixed signal semiconductors.
The company was originally founded in 1961 as the semiconductor products division of Hewlett-Packard. The division was spun off as a part of Agilent Technologies in 1999. In 2005, the division was purchased by Silver Lake Partners and KKR and subsequently had its initial public offering as Avago Technologies in August of 2008.

The company then acquired Infineon Technologies in October of 2008 followed by the acquisition of LSI Corporation in December of 2013. In May of 2015, Avago announced the purchase of Broadcom for $37 billion in cash and stock, the combined company will be called Broadcom and the deal is expected to close by the end of the 2016 calendar year.

For Avago Technologies fiscal fourth quarter ended on November 1st, 2015, the company reported net income of $429 million or $1.49 per diluted share compared to $240 million or $0.84 per diluted share in the prior quarter and $135 million or $0.50 per diluted share in the same period one year ago. On an adjusted basis allowing for one-time gains and costs, earnings came to $2.51 per share.

Net revenue came to $1.84 billion compared to $1.735 billion in the third quarter, a gain of +6 percent, and versus $1.59 billion in the same quarter one year ago, an increase of +16 percent. Analysts expected the company to report earnings of $2.38 on $1.85 billion in revenue.

Hock Tan, President and Chief Executive Officer of Avago Technologies stated in the company’s press release that, “We finished fiscal 2015 on a very strong note, delivering record levels of revenue and profitability in our recently completed fourth quarter. The LSI acquisition and the synergies we have been able to realize through its integration, as well as strong year on year growth in wireless revenues were significant contributors to our 2015 results. We are excited by the anticipated opportunities to further increase our earnings potential in fiscal 2016 following completion of our pending Broadcom acquisition.”

For the company’s full fiscal year, Avago reported a profit of $1.36 billion, or $4.85 per share on revenue of $6.82 billion. For Avago’s current quarter, which ends on January 31st, 2016, the company expects revenue to be between $1.74 billion and $1.79 billion, the analyst consensus for 2016’s first quarter revenue was $1.84 billion.

Avago stock is up significantly in this morning’s premarket, showing shareholders’ confidence in the fourth quarter earnings report. Shares are up more than 30 percent so far this year, with yesterday’s earnings release and subsequent news on the Broadcom merger, the stock could test its yearly high of $150.50 in the near term.

Other News About AVGO

Avago Secures European Union Approval for Broadcom Buy

The $37 billion transaction will be the largest of its kind in the semiconductor business.

Avago Technologies Is Poised to Regain Momentum After Earnings

Article written before the earnings release, stating the stock could resume its uptrend.
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Published on Dec 3, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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