Broadcom Revenues Drop in Q4

IRVINE, Calif. -- Broadcom Corporation (Nasdaq: BRCM) today reported unaudited financial results for its fourth fiscal quarter and year ended December 31, 2004.

Net revenue for the fourth quarter of 2004 was $539.4 million, a decrease of 16.6% from the $646.5 million reported for the third quarter of 2004 and an increase of 12.6% from the $479.1 million reported for the fourth quarter of 2003. Net income computed in accordance with generally accepted accounting principles (GAAP) for the fourth quarter of 2004 was $71.1 million, or $.20 per share (diluted), compared with GAAP net income of $43.9 million, or $.13 per share (diluted), for the third quarter of 2004, and GAAP net income of $6.1 million, or $.02 per share (diluted), for the fourth quarter of 2003.

Broadcom reports net income (loss) and basic and diluted net income (loss) per share in accordance with U.S. GAAP and additionally on a non-GAAP basis, referred to as pro forma, which excludes certain charges related to acquisitions, stock-based compensation, employer payroll tax expense on certain stock option exercises, settlement costs, restructuring costs, gains or losses on strategic investments, non-operating gains, certain other non-cash charges, valuation allowance on deferred tax assets, and the related income tax effects.

Pro forma net income for the fourth quarter of 2004, computed with the described exclusions from GAAP reporting, was $80.7 million, or $.23 per share (diluted). This compares with pro forma net income of $124.1 million, or $.36 per share (diluted), for the third quarter of 2004, and pro forma net income of $61.3 million, or $.19 per share (diluted), for the fourth quarter of 2003. GAAP and pro forma net income per share were based on 353.8 million weighted average shares outstanding (diluted) for the fourth quarter of 2004. GAAP and pro forma net income per share were based on 347.4 million weighted average shares outstanding (diluted) for the third quarter of 2004 and 330.8 million weighted average shares outstanding (diluted) for the fourth quarter of 2003.

Net revenue for the year ended December 31, 2004 was $2.401 billion, an increase of 49.1% from the $1.610 billion reported for the year ended December 31, 2003. GAAP net income for the year ended December 31, 2004 was $218.7 million, or $.63 per share (diluted), compared with a GAAP net loss of $959.9 million, or $3.29 per share (basic and diluted), for the year ended December 31, 2003.

Pro forma net income for the year ended December 31, 2004 was $425.5 million, or $1.22 per share (diluted), compared with pro forma net income of $151.7 million, or $.49 per share (diluted), for the year ended December 31, 2003.

GAAP and pro forma net income per share for the year ended December 31, 2004 were based on 349.0 million weighted average shares outstanding (diluted). GAAP net loss per share for the year ended December 31, 2003 was based on 292.0 million weighted average shares outstanding (basic and diluted). Pro forma net income per share for the year ended December 31, 2003 was based on 311.7 million weighted average shares outstanding (diluted).

Broadcom believes pro forma reporting provides meaningful insight into the company's ongoing economic performance and therefore uses pro forma reporting internally to assist in evaluating and managing the company's operations. Broadcom has chosen to provide this supplemental information to investors to enable them to perform additional comparisons of operating results and to illustrate the results of ongoing operations. A reconciliation of GAAP net income (loss) to pro forma net income for the three months and fiscal years ended December 31, 2004 and 2003 appears in the financial statements portion of this release.

"Fiscal 2004 was a strong year for Broadcom, as we increased revenue and GAAP and pro forma net income to record levels, strengthened our cash position and continued to expand our presence within new and emerging end markets," commented Scott McGregor, Broadcom's President and Chief Executive Officer.

"As discussed previously, our fourth quarter results were negatively impacted by the industry-wide inventory correction that affected all of Broadcom's business groups, but which was most pronounced within a limited number of customers in our direct broadcast satellite (DBS) and enterprise networking businesses. In addition, we continued to experience the long-anticipated decline in our chipset business for servers based on Intel(R) processors. Our focus remains on entering new markets and bringing new products into existing markets, a focus that should enable Broadcom to be successful in the long- term."

Broadcom Corp.