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Broadcom's Set-Top Issues Are Overshadowing a Big iPhone 7 Ramp

With the help of Apple's (AAPL) iPhone 7 ramp and a big increase in the amount of revenue the company will get from each iPhone, Broadcom's (AVGO) results and guidance were a little better than analysts forecast. But with shares up 22% on the year going into earnings and near their highs, markets wanted better numbers still, and a hiccup at a less flashy business got in the way.

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On Thursday, Broadcom, the company that resulted from the Broadcom-Avago merger that closed in early February, reported fiscal third-quarter revenue of $3.8 billion and adjusted EPS of $2.89, topping consensus analyst estimates of $3.76 billion and $2.77. The company also guided for fiscal fourth-quarter revenue of $4.1 billion, plus or minus $75 million. That's above a consensus estimate of $4.06 billion. Nonetheless, shares are down nearly 2% after hours.

The third-quarter beat was partly driven in by better-than-expected sales within Broadcom's enterprise storage unit, which stems from the LSI and Emulex acquisitions and has been pressured by soft end-market demand. Strength in the company's "industrial and other," which benefited from strong inventory replenishment, also helped...