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Broadcom Reports First Quarter 2011 Results
Apr 26, 2011 (04:04 PM EDT)


Quarterly Net Revenue -- Up 24% from Prior Year

Conference Call to be Webcast Today at 1:45 p.m. Pacific Time

IRVINE, Calif., April 26, 2011 /PRNewswire/ --

Q1 Summary

  • Total Revenue: $1.82 billion (up 24% year over year)
  • Gross Margin: 50.7% (Product Gross Margin: 48.9%)
  • Operating Margin: 12.9%
  • Net Income: $228 million
  • Diluted GAAP Earnings per Share: $0.40
  • Cash Flow from Operations: $334 million

Broadcom Corporation (Nasdaq: BRCM) today reported unaudited financial results for its first quarter ended March 31, 2011.

Net revenue for the first quarter of 2011 was $1.82 billion. This represents a decrease in net revenue of 6.6% compared with the $1.95 billion reported for the fourth quarter of 2010 and an increase of 24.2% compared with the $1.46 billion reported for the first quarter of 2010. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the first quarter of 2011 was $228 million, or $.40 per share (diluted), compared with GAAP net income of $266 million, or $.47 per share (diluted), for the fourth quarter of 2010, and GAAP net income of $210 million, or $.40 per share (diluted), for the first quarter of 2010.

For a discussion of certain selected transactions and their related accounting impact for all periods presented, see the "Unaudited Supplementary Financial Data" schedule below.

"Broadcom reported solid results for the first quarter, with revenue above the mid-point of guidance and better-than-expected profitability," said Scott A. McGregor, Broadcom's President and Chief Executive Officer.  "In addition, momentum continues to build around our innovative solutions.  Following a record year in 2010, we had record design wins in the first quarter, which speaks to the continued underlying strength of our integrated solutions for the Home, Hand and Infrastructure markets."

Conference Call Information

As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its first quarter financial results and current financial prospects today at 1:45 p.m. Pacific Time (4:45 p.m. Eastern Time).  The company will broadcast the conference call via webcast over the Internet.  To listen to the webcast, or to view the financial and other statistical information required by Securities and Exchange Commission (SEC) Regulation G, please visit the Investors section of the Broadcom website at www.broadcom.com/investors.  The webcast will be recorded and available for replay until 10:00 p.m. Pacific Time on Tuesday, May 17, 2011.

The financial results included in this release are unaudited.

About Broadcom

Broadcom Corporation is a prominent technology innovator and global leader in semiconductors for wired and wireless communications.  Broadcom® products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment.  We provide the industry's broadest portfolio of state-of-the-art system-on-a-chip and embedded software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices.  These solutions support our core mission: Connecting everything®.

Broadcom, one of the world's largest fabless communications semiconductor companies, with 2010 revenue of $6.82 billion, holds more than 5,100 U.S. and 2,200 foreign patents, and has more than 7,700 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.

Broadcom, a FORTUNE 500® company, was recognized in FORTUNE's 2011 "World's Most Admired Companies" survey as the innovation leader in the semiconductor category. Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000 or at www.broadcom.com.

Note Regarding Use of Non-GAAP Financial Measures

Broadcom reports cost of product revenue, product gross profit, product gross margin and income from operations in accordance with GAAP and supplementally on a non-GAAP basis. Broadcom's presentation of non-GAAP cost of product revenue, non-GAAP product gross profit, non-GAAP product gross margin excludes certain charges related to acquisitions, stock-based compensation expense and employer payroll tax expense on certain stock option exercises. In addition to the exclusions noted above, our non-GAAP income from operations also excludes settlement costs and impairment of long-lived assets. Stock-based compensation expense primarily includes the impact of stock options and restricted stock units issued by Broadcom. Reconciliations of our GAAP to non-GAAP financial measures for the three months ended March 31, 2011 and 2010 appear in the financial statements portion of this release titled "Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments" and "Unaudited Reconciliation of GAAP Income from Operations to Non-GAAP Income from Operations."

Broadcom believes that the presentation of these non-GAAP measures provide important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. Broadcom's management believes that the use of these non-GAAP financial measures provides consistency and comparability among and between results from prior periods or forecasts and future prospects, and also facilitates comparisons with other companies in our industry, many of which use similar non-GAAP financial measures to supplement their GAAP results. Broadcom's management has historically used these non-GAAP financial measures when evaluating operating performance, because we believe that the inclusion or exclusion of the items described above provides insight into our core operating results, our ability to generate cash and underlying business trends affecting our performance. Broadcom has chosen to provide this information to investors to enable them to perform additional analyses of past, present and future operating performance and as a supplemental means to evaluate our ongoing core operations. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

For additional information on the items excluded by Broadcom from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Cautions regarding Forward-Looking Statements:

All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to, guidance provided on future revenue, gross product margin and operating expense targets for the second quarter of 2011, references to opportunities within the wired and wireless communication markets to grow revenue and gain share in core markets and the continued underlying strength of our products for our core markets. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

These risks and uncertainties include, but are not limited to the following:

  • We face intense competition.
  • We depend on a few significant customers for a substantial portion of our revenue.
  • Our quarterly operating results may fluctuate significantly.
  • We may fail to adjust our operations in response to changes in demand.
  • We face risks associated with our acquisition strategy.
  • Our operating results may be adversely impacted by worldwide economic uncertainties and specific conditions in the markets we address.
  • Our stock price is highly volatile.
  • We may be required to defend against alleged infringement of intellectual property rights of others and/or may be unable to adequately protect or enforce our own intellectual property rights.
  • Our business is subject to potential tax liabilities.
  • We manufacture and sell complex products and may be unable to successfully develop and introduce new products.
  • We are subject to order and shipment uncertainties.
  • We are exposed to risks associated with our international operations.
  • We depend on third parties to fabricate, assemble and test our products.
  • Our co-founders and their affiliates may control the outcome of matters that require the approval of our shareholders.
  • Government regulation may adversely affect our business.
  • We may be unable to attract, retain or motivate key personnel.
  • There can be no assurance that we will continue to declare cash dividends.
  • Our articles of incorporation and bylaws contain anti-takeover provisions.

Our Annual Report on Form 10-K for the year ended December 31, 2010, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release and the related conference call for analysts and investors speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

Broadcom®, the pulse logo, Connecting everything®, and the Connecting everything logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU.  Any other trademarks or trade names mentioned are the property of their respective owners.

BROADCOM CORPORATION

Unaudited GAAP Condensed Consolidated Statements of Income

(In millions, except per share amounts)




Three Months Ended

March 31,


2011

2010

Net revenue:



Product revenue                                   

$    1,752

$  1,404

Income from Qualcomm Agreement                     

52

52

Licensing revenue                                 

12

6

Total net revenue                                

1,816

1,462

Costs and expenses:



Cost of product revenue                           

895

695

Research and development                        

498

421

Selling, general and administrative                   

179

133

Amortization of purchased intangible assets           

7

3

Impairment of long-lived assets                     

9

Settlement costs (gains), net                       

(5)

3

Total operating costs and expenses               

1,583

1,255

Income from operations                             

233

207

Interest income, net                                 

2

Other income (expense), net                         

(1)

3

Income before income taxes                         

232

212

Provision for income taxes                           

4

2

Net income                                       

$       228

$  210

Net income per share (basic)                         

$  .42

$  .42

Net income per share (diluted)                        

$  .40

$  .40

Weighted average shares (basic)                     

539

495

Weighted average shares (diluted)                     

575

527




Dividends per share                                

$  0.09

$  0.08






The following table presents details of total stock-based compensation expense included in each functional line item in the unaudited condensed consolidated statements of income above:




Three Months Ended

March 31,


2011

2010

Cost of product revenue                               

$    7

$    7

Research and development                             

101

89

Selling, general and administrative                       

36

31




BROADCOM CORPORATION

Unaudited Condensed Consolidated Statements of Cash Flows

(In millions)



Three Months Ended

March 31,


2011

2010

Operating activities



Net income                                        

$  228

$  210

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization                     

23

20

Stock-based compensation expense:



Stock options and other awards                 

40

36

Restricted stock units                         

104

91

Acquisition-related items:



Amortization of purchased intangible assets       

22

10

Impairment of long-lived assets                 

9

Changes in operating assets and liabilities:             



Accounts receivable                         

60

(94)

Inventory                                   

48

(34)

Prepaid expenses and other assets             

(28)

13

Accounts payable                           

(70)

44

Deferred revenue and income                  

(9)

(9)

Accrued settlement costs                     

(1)

Other accrued and long-term liabilities            

(93)

(18)

Net cash provided by operating activities       

334

268

Investing activities



Net purchases of property and equipment               

(45)

(18)

Net cash paid for acquired companies                  

(102)

Purchases of strategic investments                    

(5)

Purchases of marketable securities                     

(654)

(65)

Proceeds from sales and maturities of marketable securities 

794

189

Net cash provided by (used in) investing activities

95

(1)

Financing activities



Repurchases of Class A common stock                 

(421)

(154)

Dividends paid                                     

(49)

(40)

Payment of debt assumed in acquisitions                

(14)

Proceeds from issuance of common stock               

112

82

Minimum tax withholding paid on behalf of employees for restricted stock units

(56)

(30)

Net cash used in financing activities           

(414)

(156)

Increase in cash and cash equivalents                 

15

111

Cash and cash equivalents at beginning of period         

1,622

1,397

Cash and cash equivalents at end of period             

$  1,637

$  1,508






UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION




March 31,

2011

December 31,

2010


(In millions)

Cash and cash equivalents                                        

$  1,637

$  1,622

Short-term marketable securities                                    

645

1,035

Long-term marketable securities                                     

1,649

1,401

Total cash, cash equivalents and marketable securities                  

$  3,931

$  4,058

Decrease from prior year end                                      

$  (127)








BROADCOM CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(In millions)




March 31,

2011

December 31,

2010

ASSETS



Current assets:                                                             



Cash and cash equivalents                                                 

$  1,637

$  1,622

Short-term marketable securities                                             

645

1,035

Accounts receivable, net                                                   

760

820

Inventory                                                                

550

598

Prepaid expenses and other current assets                                     

117

108

Total current assets                                                     

3,709

4,183

Property and equipment, net                                                   

291

266

Long-term marketable securities                                                

1,649

1,401

Goodwill                                                                   

1,685

1,677

Purchased intangible assets, net                                               

346

366

Other assets                                                               

56

51

Total assets                                                           

$  7,736

$  7,944

LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:                                                            



Accounts payable                                                         

$  536

$  604

Wages and related benefits                                                 

122

208

Deferred revenue and income                                               

46

55

Accrued liabilities                                                         

416

404

Total current liabilities                                                    

1,120

1,271

Long-term debt                                                             

697

697

Other long-term liabilities                                                      

151

150

Commitments and contingencies

Shareholders' equity                                                         

5,768

5,826

Total liabilities and shareholders' equity                                      

$  7,736

$  7,944




BROADCOM CORPORATION

Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments

(In millions)




Three Months Ended

March 31,


2011

2010

Product revenue                                         

$  1,752

$  1,404

GAAP Cost of product revenue                             

895

695

GAAP product gross profit                                 

$  857

$  709

GAAP product gross margin                               

48.9%

50.5%


Cost of product revenue:



GAAP cost of product revenue                           

$  895

$  695

Stock-based compensation                         

(7)

(7)

Amortization of purchased intangible assets & acquired inventory

(20)

(11)

Non-GAAP cost of product revenue                       

$  868

$  677




Product revenue                                         

$  1,752

$  1,404

Non-GAAP cost of product revenue                         

868

677

Non-GAAP product gross profit                             

$  884

$  727

Non-GAAP product gross margin                           

50.5%

51.8%







BROADCOM CORPORATION

Unaudited Reconciliation of GAAP Income from Operations to Non-GAAP Income from Operations

(In millions)




Three Months Ended

March 31,


2011

2010

GAAP income from operations                             

$  233

$  207

Adjustments:



Stock-based compensation                         

144

127

Amortization of purchased intangible assets & acquired inventory

27

14

Employer payroll tax expense on certain stock option exercises

3

1

Impairment of long-lived assets                      

9

-

Settlement costs (gains),net                         

(5)

3

Total GAAP to Non-GAAP adjustments                       

178

145

Non-GAAP income from operations                          

$  411

$  352




BROADCOM CORPORATION

Guidance for the Three Months Ending June 30, 2011



Three Months Ending June 30, 2011

Commentary

Total Net Revenue (in billions)

$1.75  billion to $1.85 billion

Roughly flat vs Q1'11

Product Gross Margin (GAAP)

Up approximately 50bp from Q1'11

Excludes step-up and amortization charges related to the Provigent acquisition

Research &  development and selling, general, and administrative expenses (GAAP)

Approximately flat from Q1'11

Excludes derivative settlement accounting and the impact of the Provigent acquisition

Share Count (GAAP Diluted)

~575 - 580 million shares





Broadcom has based the preceding guidance for the three months ending June 30, 2011 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of April 26, 2011. Our guidance consists of predictions only, however, and is subject to a wide range of known and unknown business risks and uncertainties, many of which are beyond our control. The forecasts and projections contained in the table above should not be regarded as representations by Broadcom that the estimated results will be achieved. Projections and estimates are necessarily speculative in nature and actual results may vary materially from the guidance we provide today.

The guidance set forth in the above table should be read together with the information under the caption, "Cautions regarding Forward-Looking Statements" above, our Annual Report on Form 10-K for the year ended December 31, 2010, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances.


Broadcom Business Press Contact
Karen Kahn
Vice President, Corporate Communications
949-926-3139
kkahn@broadcom.com

Broadcom Investor Relations Contact
Chris Zegarelli
Director, Investor Relations
949-926-7567
czegarel@broadcom.com




SOURCE Broadcom Corporation; BRCM Corporate