Broadcom Profits Surpass Expectations
Edging past Wall Street’s expectations, Broadcom Corp., the Irvine developer of high-speed communication chips, reported higher-than-expected first-quarter earnings of $41.8 million Tuesday on sales that jumped 91%.
The profit, which amounted to 17 cents a share, is a sharp jump from $15.7 million, or 7 cents a share, earned in last year’s first quarter. Quarterly sales rose to $191.3 million, up from $100 million.
Henry T. Nicholas III, the company’s chief executive, attributed part of Broadcom’s solid performance to its dominance of the broadband, or high-speed, communications market, where 80% of cable modems and digital TV set-top boxes use its silicon chips.
The quarterly results include one-time charges related to acquisitions. Excluding those expenses, Broadcom earned 18 cents a share. Analysts had predicted that the company would earn 16 cents a share, excluding the one-time items, according to those polled by First Call/Thomson Financial.
The results reflect Broadcom’s 2-for-1 stock split Feb. 11.
Broadcom’s normally volatile stock, which had slumped to a three-month low of $122.25 a share on the Nasdaq last week, rose $8.44 a share to $157 on Tuesday.
“This is a company that has a phenomenal ability to focus and execute,” said Jeff Lipton, a financial analyst who tracks the communications industry with Hambrecht & Quist. “They have a big advantage in that regard.”
Broadcom, whose customers include Motorola Inc. and Cisco Systems Inc., noted it had seen strong demand for its computer networking, cable modem and digital set-top box products.
In addition, Nicholas said Broadcom enjoyed a growing acceptance of its products in several emerging markets, such as home networking and very high speed digital subscriber line, or VDSL, technology.
“I feel better about the prospects for our business than I ever have in the history of the company,” Nicholas said. “Today you can go buy a home-networking equipped PC, and it will have Broadcom silicon inside of it.”
In the last year, Broadcom has acquired eight companies to flesh out its products in home-networking equipment and other areas.
In the first quarter, the company also completed a trio of acquisitions: BlueSteel Networks in Mountain View, Digital Furnace in Atlanta and Stellar Semiconductor Inc. in San Jose.
BlueSteel develops high-performance Internet security processors, Digital Furnace develops technology and software that increase the capacity of existing high-speed networks for interactive services and Stellar’s graphics technology makes interactive television and Internet content more attractive--and less expensive to create.
