Broadcom’s Profit Falls 76% on Costs of Lawsuit

Chip maker Broadcom Corp. said Thursday that its second-quarter profit fell 76%, citing the costs of settling a lawsuit. Sales beat forecasts, sending the shares up as much as 12% in after-hours trading.

The Irvine-based company, which makes microchips for consumer electronics and computer networks, said net income fell to $15.1 million, or 4 cents a share, from $63.8 million, or 18 cents, a year earlier.

Sales were $604.9 million, down 5.7% from a year earlier but still exceeding the highest analyst estimate of $585 million.

Chief Executive Scott McGregor said rising sales of chips for TV set-top boxes and high-speed Internet access countered a $70-million drop in sales of server chipsets to Intel Corp.

Broadcom also paid $110 million to settle a class-action lawsuit that accused the company of withholding information from shareholders.

The lawsuit charged that Broadcom’s executives failed to disclose the financial details of warrants related to five acquisitions in 2000 and 2001. Broadcom admitted no wrongdoing, and its insurers paid $40 million, for a total of $150 million.

Broadcom’s shares fell $1.13 to $38.61 before the earnings announcement.