Broadcom (Nasdaq: BRCM) came into Tuesday night's fourth-quarter report on an absolute tear. The stock soared 17% in January, bolstered by strong smartphone sales in general this holiday season, and by major customer Apple's (Nasdaq: AAPL) gains in particular.
And what do you know -- the momentum carried on straight through the report. The stock jumped as much as 8.4% in early Wednesday action as Broadcom slapped analyst expectations silly.
Driven chiefly by strong sales of 3G wireless radio chips in emerging markets like South America and India, Broadcom delivered non-GAAP earnings of $0.68 per share on sales of $1.82 billion. Those figures are ahead of analyst targets, though both fell compared to the year-ago quarter. The outlook for the next quarter also slid past Wall Street expectations. Separately, the company also boosted its quarterly dividend by a penny to $0.10 per share.
That's a lot of good news all at once, and Broadcom certainly deserved this euphoric market reaction.
Looking ahead, Broadcom sees a lot of opportunity in those emerging markets. The company has "historically been underpenetrated" outside of North America and Western Europe, according to CEO Scott McGregor. That's changing. McGregor highlighted a hot-selling Samsung smartphone in the Indian market as well as Far Eastern mobile players ZTE, G'Five, and Foxlink as evidence of Broadcom's rising importance overseas.
The 3G chips are replacing older 2G technologies in those markets. Broadcom also has 4G products ready for global deployment, as well as next-generation WiFi chips and even some near-field communications solutions to jump on the phone-powered payments trend.
So even if Apple played an important part in Broadcom's recent successes, with several Broadcom chips in both the iPad 2 and iPhone 4S, the company sees plenty of opportunity ahead with or without Cupertino. That's a plus for us long-term Apple skeptics out there.
Fellow Fool Eric Bleeker sees this strong report as a good sign for QUALCOMM (Nasdaq: QCOM), which plays in many of the same wireless sandboxes and reports earnings after Wednesday's market close. I agree. You should dig deeper into Qualcomm, stat, so you can fully appreciate that report tonight.
