Broadcom Expects to Return to Profitability This Year

Broadcom Corp., the largest maker of chips for cable modems, expects to return to profitability in one of this year’s quarters, Chief Executive Henry Nicholas said Wednesday.

“We expect to return to profitability this year, and we are very optimistic about resuming our 50% annual [sales] growth rate toward the end of this year,” Nicholas said at a Morgan Stanley. investor conference. Broadcom spokesman Nick Kormeluk said Nicholas meant that the firm would report earnings for a quarter this year.

Broadcom’s sales declined in the second and third quarters because of canceled orders and an inventory glut at customers. Nicholas has chosen to endure several quarters of losses from operations, betting that investing in research and development now will pay off later.

Shares of the Irvine-based company rose $2.19, or 4.4%, to close at $51.43 on the Nasdaq Stock Market. They fell 51% last year after a 38% decline in 2000.

Analysts expect Broadcom to report an operating profit in the fourth quarter of 2002 after six periods of losses, according to the average analyst estimate from a Thomson Financial/First Call poll.

In October, Broadcom said sales in the fourth quarter of 2001 would rise less than 5% from the previous period, the second straight increase after two declines.

Broadcom is expected to post a fourth-quarter loss of 12 cents a share, the average estimate from a First Call poll. Seven analysts forecast revenue, on average, of $221 million, First Call said.