Broadcom Executives Receive Scant Criticism at Meeting

Despite a spate of bearish developments in recent months, Broadcom Corp. executives skated through their annual meeting Tuesday, receiving only scant criticism from investors.

Chief Executive Henry T. Nicholas III fielded generally sympathetic questions from the 250 shareholders who filed into a large convention room at the Irvine Marriott hotel.

But it wasn’t entirely a love fest.

A controversial accounting method used by the Irvine chip maker during an acquisition spree last year drew fire from shareholder Alan Mikhak, who said Broadcom should have provided more information about the tactic.

Before buying some of the companies, Broadcom encouraged them to issue customers warrants--promises to sell stock at a discount--in exchange for commitments to keep buying products.

In March, Broadcom lowered its quarterly revenue by about $38.6 million to account for costs associated with those agreements, and said most of the warrant-related deals had been canceled.

The company faces at least eight shareholder lawsuits--Mikhak is one of the plaintiffs--stemming from the way it originally accounted for the agreements. Broadcom says the lawsuits are frivolous.

Shareholder Richard Younkin said he believed the accounting method was proper. “People may not like it, but I think what they did was legal,” said Younkin, an architect from Huntington Beach.

There was a bit of grousing about the company’s slumping shares. The stock, which peaked at $274.75 last August, closed Tuesday at $36.89 a share, down $2.46 in Nasdaq trading.

“No one foresaw the most unprecedented and swift decline in the equities market that we’ve seen,” Nicholas said.

Shareholders voted to increase the common stock by 25 million shares, to be used in part to offer Broadcom employees a chance to trade in stock options that have lost their value for new options that probably will reflect the lower stock price. The move increases the total shares outstanding to 205 million.