Broadcom Rebounds on Strong Chip Sales
Continuing its financial turnabout, Broadcom Corp. said Thursday that first-quarter revenue surged 75% on continuing strong sales of chips for devices such as cellphones, TV set-top boxes and Internet routing equipment.
The Irvine-based company said it earned $39.9 million, or 12 cents a share, contrasted with a loss of $67.9 million, or 25 cents, a year earlier. Revenue rose to $573.4 million from $327.5 million.
The company’s revenue should increase 10% in the second quarter to $630.1 million, Chief Financial Officer William Ruehle told financial analysts on a conference call. Analysts polled by Thomson First Call had been expecting sales to hit $591.3 million in the period.
Broadcom shares jumped to $43.21 in after-hours trading after rising $1.71 to $40.80 during Nasdaq’s regular session Thursday.
“Across the semiconductor industry, these guys are growing much, much faster than anybody,” said Ambrish Srivastava, an analyst in San Francisco with investment bank Harris Nesbitt Gerard.
“That’s because they’re not tied necessarily to the cyclical nature of the business; they’re growing because of their product,” said Srivastava, who does not own Broadcom shares and whose firm does not have a banking relationship with the company. “A year ago, they were nobody. Now, they’re the No. 1 guy in wireless” local area networks, popularly known as Wi-Fi.
Booming spending on high-speed and wireless Internet access helped Broadcom end a three-year profit drought in the fourth quarter of 2003.
“Bookings continue to be strong,” he said. “We expect them to be broad-based, with broadband and mobile/wireless accounting for most of the growth.”
Revenue drivers in the first quarter included significant market share gains in set-top boxes for satellite TV customers, continued adoption of high-definition television and overall growth in cable modems and wireless hardware including cellular handsets, said co-founder and Chief Technology Officer Henry Samueli. All those devices use Broadcom chips.
“All these markets are what have been lifting Broadcom’s sales in recent quarters,” said Albert Lin, an analyst in San Francisco with research and brokerage firm American Technology Research.
Also, Chief Executive Alan “Lanny” Ross said he had had heart surgery this month and would be “taking it easy” for a while before returning to work full time.
