Demand Staunches Losses at Broadcom
Broadcom Corp. on Tuesday became the latest technology firm to show a turnaround amid increased tech spending when it reported that strong sales of high-speed Internet access and wireless equipment helped it end a string of quarterly losses.
The Orange County chip maker reported a fourth-quarter profit of $6.1 million, or 2 cents a share, its first profit in three years and a far cry from its year-earlier net loss of $1.76 billion, which sparked the resignation of its founder and chief executive.
Revenue for the quarter ended Dec. 31 was $479 million, up 62% from $296 million in the fourth quarter of 2002.
“It’s a blowout quarter by almost every matrix,” said Dushyant Desai, a semiconductor analyst in San Francisco with investment bank C.E. Unterberg. “All segments of their business grew, they’re not affected by seasonality, their gross margins are stable, their pricing is stable,” said Desai, who does not own Broadcom shares.
Broadcom, which makes chips for Internet routing equipment, cable and satellite TV set-top boxes, wireless devices and cellphones, also was upbeat about sales growth in the January-March quarter.
“We now believe we may be able to achieve a revenue increase of 10% over the fourth quarter,” Chief Financial Officer William Ruehle said in a conference call with financial analysts.
Chief Executive Alan “Lanny” Ross said he was encouraged by increased corporate spending on technology, reversing a slowdown over the last three years.
“I think tech spending has upticked substantially,” Ross said in an interview. “The market feels like it’s starting after a period of being in the doldrums.”
For the full year, Irvine-based Broadcom lost $960 million, or $3.29 a share, on annual revenue that rose 49% to $1.6 billion. In 2002, Broadcom lost $2.24 billion, or $8.35 a share, on sales of $1.08 billion.
Excluding special charges, Broadcom had an operating loss of $152 million, or 49 cents a share, for the year, compared with an operating loss of $54.4 million, or 20 cents, in 2002.
Broadcom shares fell 75 cents to $40.60 in Nasdaq trading before the results were announced. Shares rose $3.08 to $43.68 in after-hours trading.
In the fourth quarter of 2002 Broadcom took a $1.2-billion charge to write down the value of previous acquisitions. Then-Chief Executive Henry Nicholas III, Broadcom’s hard-charging founder, said at that time that he would resign to rest and work on repairing his marriage.
