Broadcom Q4 FY23 Earnings

By Patrick Moorhead - December 13, 2023

The Six Five team discusses Broadcom Q4 FY23 Earnings.

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Transcript:

Daniel Newman: The first earnings report since the close of the deal for Hock Tan. You went on CNBC, you talked about this, you killed it, crushed it. What happened there?

Patrick Moorhead: They had an earnings beat. What’s interesting, I thought they met revenue, but people are talking about them missing.

Daniel Newman: It depends on the number. I saw a beat, like a small beat, but it was actually right above, so.

Patrick Moorhead: Exactly.

Daniel Newman: I don’t know what they’re talking about.

Patrick Moorhead: Exactly. I get on the show and it’s like, “And they miss.” It’s like, “No, they didn’t.” Anyways, that doesn’t mean anything. It’s kind of exactly what I had expected, with no surprises. Semiconductors, mid-digit growth, EBITDA. Let’s just jump into the forecast and what they talked about the future. $50 billion in revenue. I think the street was wanting 51. EBITDA of 30 billion. My take on that is, that’s incredible freaking numbers. It’s going to come after a lot of re-architecture spinning off the end-user computing group and carbon black, some layoffs, some consolidations. It’s the classic Broadcom play of letting the business unit run its business and then minimizing share services at the corporate layer.

It worked in semiconductors. Broadcom learned a lot with their two first software acquisitions. Anyways, and I think that they’re going to nail this one. I think they’re just being conservative. They’re focused on the right things with VMware, which is private and hybrid cloud. I’ll do a victory lap. I think a year ago I said that they were going to spin off the end-user computing group and anything that has to do with a PC. It’s not strategic. It was affirmed last night that those would be divested.

Daniel Newman: That’s it?

Patrick Moorhead: That’s it, baby.

Daniel Newman: I want to know how anybody could have a single complaint about a company that generates $30 billion of EBITDA and $50 billion of revenue.

Patrick Moorhead: No, I know. It’s incredible.

Daniel Newman: This company’s incredible. Pat, 60% EBITDA at 50 billion in revenue. I don’t know. You can question his approach, but it’s very hard to question those results. And so good earnings report, okay, look, single digit growth of VMware, it’s going to take a minute. I can tell you as someone that’s bought six companies in 12 months and trying to spin them up and grow them, that there’s always a bit of a… It’s a slingshot when you first acquire them and you get all your synergies. At first, sometimes you even go backwards. It’s like, why am I going backwards? Because there’s so much minutia you have to deal with when you acquire a company, and now do this at companies that are billions instead of millions of dollars and try to figure this out. People, products, go to market, distribution, relationships, all this stuff takes time to sort. That 8% or so that they’re forecasting will grow. I absolutely assure you, because he’s going to refocus it.

He’s going to focus it on the things that are important. He’s going to take all the focus away. By the way, Pat, I just thought it was kind of interesting, they’re going to move to Palo Alto. They say that Hock is shrewd with the dollar, but he knows a good thing when he sees it. He’s also told everybody to get back to work. He wants the big campus and he wants it full of people. And so I thought that was pretty cool. That is an amazing campus. I look forward to seeing it full of people, Pat. It was a ghost town. We went there a couple of different times. I was there. It was eerie. It was almost dystopian how empty this place was. He will have the place buzzing and humming with people. I think if the workplace is anything like our life, I don’t have a lot of sympathy for that.

We’ve been on the road every day of every week for the whole year. I think people that have great jobs working for really exciting companies should occasionally go back to the office.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.