While most major technology companies have already reported their latest quarterly results, both Broadcom Limited (NASDAQ:AVGO) and Micron Technology (NASDAQ:MU) will unveil their latest numbers this month.
Broadcom is in the middle of a complicated attempt to acquire Qualcomm (NASDAQ:QCOM) in a more than $100 billion deal, and investors are no doubt eager to hear any updates. Micron finds itself enjoying a perfect storm of high memory chip prices and surging volume, leading to record revenue and profit. Here's what you need to know about these two companies as they prepare to report their quarterly results.
Semiconductor giant Broadcom Ltd. was formed in early 2016 when Broadcom Corp. merged with Avago Technologies in a $37 billion deal. Broadcom is now looking to top itself. The company is actively trying to acquire mobile chip giant Qualcomm, with its latest offer valued at around $117 billion.
Qualcomm has repeatedly turned down Broadcom, and it's attempting to close a major acquisition of its own. The former originally announced its acquisition of NXP Semiconductors (NASDAQ:NXPI) back in 2016, but has failed to close the transaction. Qualcomm raised its offer price in February, which led Broadcom to shave a few billion dollars off its offer.
Though Qualcomm had originally planned to hold its annual meeting on March 6, where shareholders would vote on the Broadcom acquisition, it's delayed it until April as a result of an interim order received from the Committee on Foreign Investment in the United States. Any deal between Broadcom and Qualcomm could potentially be killed on national security concerns.
Broadcom is scheduled to report its fiscal first-quarter results on March 15 after the market closes. The company is in the process of redomiciling to the U.S., which is expected to be completed by early May. Its proposed acquisition would no longer be a CFIUS-covered transaction once this process is complete, according to Broadcom.
There will almost certainly be more twists and turns in this story, and investors will be keen to hear what Broadcom management has to say on March 15.
Thanks to soaring prices for DRAM and NAND memory chips, Micron is enjoying a period of exceptional growth and profitability. Revenue soared 71% year over year during the fiscal first quarter, while operating margin expanded fivefold to 45.5%.
A combination of rising selling prices and increased volume pushed up Micron's top and bottom lines. DRAM average selling prices jumped more than 50% year over year in the first quarter, while volume rose by more than 20%. Tight supply and strong demand, particularly for data center and graphics products, put Micron in an enviable position.
Fiscal second-quarter results will be posted on March 22 after the market closes. The company raised its guidance about a month ago, predicting that revenue would come in between $7.20 billion and $7.35 billion, with earnings per share between $2.70 and $2.75. At the midpoint of that range, revenue would grow by 57% year over year.
Guidance will be the most valuable information for investors, as it will give them some idea of where Micron sees the market going. In the past, periods of strong profits eventually gave way to losses as the supply demand relationship reversed -- it's posted a loss in four of the past 10 years. So far, there's been no real sign that a downturn is coming anytime soon, but multibillion-dollar bottom-line swings haven't been uncommon for the company.
The stock trades at a single-digit multiple of earnings because the current level of earnings isn't sustainable. It's up to Micron to convince investors this month that it can keep the bottom line healthy even if memory chip prices start to come down.
Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends Broadcom Ltd and NXP Semiconductors. The Motley Fool has a disclosure policy.