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Broadcom Blows 'Em Away

Craig Matsumoto
1/26/2006

Broadcom Corp. (Nasdaq: BRCM) stock soared after hours as the company screamed past analysts' forecasts in today's earnings results and in its forecast for the March quarter.

In after-hours trading, Broadcom was up $11.26 (19%) to $69.98.

For its fourth quarter, which ended Dec. 31, Broadcom reported profits of $195 million, or 50 cents per share, on revenues of $821 million, compared with profits of $133 million, or 35 cents per share, on revenues of $695 million the previous quarter. (See Broadcom Posts Q4.)

For its fourth quarter a year ago, Broadcom reported profits of $71 million, or 20 cents per share, on revenues of $539 million.

Broadcom's non-GAAP net income happened to also be 50 cents per share, destroying the analyst forecast of 39 cents per share as tallied by Thomson Reuters . Analysts had expected revenues of $762 million, and Broadcom outdid that figure, too.

Most stunning, though, was Broadcom's forecast for the first quarter of 2006, which tends to be weak for the company. Rather than predict "seasonal softness," Broadcom told analysts on a conference call today that revenues could climb to the range of $865 million to $875 million.

"We expect this growth to be broad based, with the sharpest growth to come from our broadband communications sector," Broadcom CFO William J. Ruehle said.

The rosy first-quarter forecast is based on Broadcom's product backlog. But officials wouldn't make any predictions about whether this good fortune will carry over beyond the first quarter. As for why the fourth quarter was so strong, Broadcom executives said little of note during their prepared remarks, with CEO Scot McGregor tossing out the usual platitudes about "communications and convergence" driving growth.

Mobile multimedia, direct broadcast satellite, Bluetooth, gigabit Ethernet switching, and DSL all contributed to the strong quarter, Ruehle said.

Broadcom's stock was up roughly 8 percent in early after-hours trading, then got a further jolt upwards once the guidance figures got announced.

Separately today, Broadcom announced a 3-for-2 stock split and an increased stock buyback program. (See Broadcom Splits.)

— Craig Matsumoto, Senior Editor, Light Reading

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