Broadcom, Dan Schwarzman, Ian King discussed on Bloomberg Daybreak Asia


I'm Dan schwarzman that your Bloomberg world sports update, Brian. Thank you very much, Dan, 16 minutes here before the top of the hour. Well, in looking at some of the corporate news this morning, Broadcom giving Rosie revenue forecast for the current quarter and also released some profit numbers that were reasonably positive. Let's get to Ian king. Bloomberg news U.S. semiconductor reporter. So the chip business with sales of more than $7 billion here. That was a jump of 21%. I guess a lot to like in this report. The one thing I would say Ian and perhaps you can shed some light on what investors are looking at here. The stock's only up 6 tenths of 1% in late trading, so it's not exactly a slam dunk. How do you see things? Right now, any news out of a chip company talking about what's going to happen if it's not bad. It's good. The concern with companies like Broadcom who've done a good job of managing their way through this is that they just haven't seen it yet because they've controlled their orders. They haven't allowed this buildup of inventory. So a lot of investors are like, okay, this isn't terrible news, but maybe that's coming down the line. And the company addressed that again today. So exactly. So can you give us a bit more on why it's different for them and when others in the space have really had a shocker? Yeah, I mean, you remember way back to the pandemic, this company and it's kind of characterful as CEO hog town was like, okay, you want to order stuff from us? You're not going to be allowed to cancel it. And that was relatively unprecedented in the industry. And he said, look, we're booked out. This is for the whole year. These are the orders. We're not going to sell to anybody who's going to put this in inventory. We're only going to supply he's being very, very strict. And sort of maintains stability, which I think people have rewarded him for. At the same time, though. And he's acknowledged in reality and what he said today was like, we're hopeful that we're going to have this kind of quote unquote soft landing scenario in the second half where growth will slow, but it won't go away totally. Yeah. So managing inventory very well done there. And you always get credit for that. But the forecast, the revenue forecast being fairly rosy is good news. And then if you sort of put that together with what Nvidia said in its earnings, and then also today, down low reportedly taking a stake in AMD, are things starting to look a little better broadly in the industry. I think you need to look at it a little bit more narrowly. I think it's too early to make that kind of a broad pronouncement. All through the companies that you just mentioned and Broadcom today were talked about this at length, a kind of part of this current sort of chat GPT kind of AI excitement, shall we say, and town was questioned at length today about what he sees that impact on his earnings and he talked about this at length and said, look, yeah, we're seeing a lot of demand for the networking gear that will support these computer systems that will help with these generative AI systems everybody's excited about this. So that was kind of a really positive sign, but on a fundamental level of contrast, you know, the mobile related to wireless related stuff that they do isn't that strong at all and that's in keeping with what's going on in that market and other big markets for semiconductors which is we haven't really seen the bottom yet. Absolutely. And this is something which, of course, we have to wait for here as well. Now, looking ahead, what do they see as any headwinds apart from the positivity, of course? Yeah, I mean, they weren't specific, but they talked sort of anecdotally like, yes, we've had some customers asking us to do what the industry calls push out, which is basically saying, yeah, we know we've ordered this, yes, we know we've got to pay for it, but could you help us out by giving it to us a bit later and billing is for it a little bit later. They said that's not material but for them to even say that indicates that this frenzy that we've seen, this kind of mass queueing to get in line for things that people can't get that that's certainly over now. Was much said about the purchase of VMware and how that integration is going. As you can imagine, people were trying to weed out some details from him to get a read on how that's going and he kind of laughing and saying nice try. I'm not going to help you there. Other than really restating his continued confidence that he believes he can convince regulators and that this will close when they said it's going to close, which is within this financial year. But at the same time, that's on the back of them having to extend the closing the target closing date

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