Broadcom Inc

The stable outlook reflects our expectation that organic revenue will decline at a low-single-digit percent rate while the company focuses on integrating recently acquired CA Inc. and manages acquisitions and shareholder returns so that leverage will stay in the mid-to-high 2x area over the coming year. However, we believe the company will continue to be acquisitive beyond a 12-month horizon, and that its leverage is unlikely to remain at 2x. Large debt-funded acquisition or shareholder returns that would cause us to expect leverage to remain above 3.5x would result in a downgrade. We would also consider lowering the rating if Broadcom experiences operational issues from technological challenges or business disruptions causing leverage to remain above 3.5x. While highly unlikely over

... Inc. has successfully integrated and managed several acquisitions over the years that resulted in a diverse portfolio of semiconductor offerings used in the cloud, data centers and mobile markets. While the company has displayed the ability to deleverage quickly, we view Broadcom's financial policy framework and acquisition targets to be less predictable than those of its peers. For fiscal 2019, the company has a dividend target of 50% of prior year free cash flow, and an additional $8 billion of stock buybacks. This would exceed our projection for the company's free cash flow this year. Consequently, Broadcom will use cash on hand and is unlikely to significantly reduce its debt load. Muted impact from exposure to wireless. The chips from the wireless segment, which contributes about 25% of total revenue, are responsible for smartphones' ability to operate on today's complex multiband spectrum, and ensure optimal Wi-Fi, Bluetooth, and GPS...

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