Big Day at Broadcom 588003Big Day at Broadcom 588003
CEO Henry Nicholas steps down, and (pro forma) profitability could be just three months away
January 23, 2003
Henry Nicholas is going out on a high note -- he stepped down as CEO of Broadcom Corp. (Nasdaq: BRCM) today, while simultaneously declaring that the company expects to report "pro forma profitability" this quarter (see Broadcom Reports Q4 and Broadcom CEO Resigns).
The change of hands comes as Broadcom reports its sixth consecutive quarter of growing revenues, despite the pummeling that's hit the communications-chip sector.
Nicholas' departure could mark a dramatic turning point for Broadcom. Not only did Nicholas found the company with CTO Henry Samueli, but his cocky personality has been a hallmark of Broadcom's public image. Put it this way: He's the kind of guy who'd be rumored to buy a baseball and hockey team (see our recent interview: Henry Samueli, Broadcom Corp.).
Broadcom didn't specify why Nicholas is stepping down now. In Broadcom's press release he's quoted saying he's taking "much needed time off to deal with serious family matters." He plans to serve the remainder of his term as Broadcom's co-chairman, but won't seek re-election when his term expires in May.
Characteristically, Nicholas spiced Broadcom's earnings conference call with a dash of bravado: "We can successfully say we navigated the worst downturn in history," he said, before pronouncing that Broadcom could reach pro-forma profitability this quarter. (Note: That's not the same as profitability under generally accepted accounting principles -- GAAP -- which tend to be stricter.)
Broadcom will be in experienced hands, with Alan E. "Lanny" Ross taking over as interim CEO. Ross, a Broadcom board member, joined the company as interim chief operating officer in November (see Broadcom Names Interim COO).
Meanwhile, for its fourth quarter, Broadcom reported revenues of $296 million, compared with $227 million for the same quarter a year ago. The company posted losses of $1.8 billion, compared with losses of $183 million for last year's fourth quarter. Broadcom's losses last quarter included a $1.2 billion write-down of goodwill, due in part to the sinking value of acquired companies.
Broadcom also has completed its previously announced restructuring, which included layoffs of 487 to bring headcount to 2,580 (see Axe Falls at Broadcom). Also, as of today, the company's been reorganized into the following business units: client/server networking; network infrastructure, switching and security; and broadband communications.
New CEO Ross took his turn at the mike during the conference call, tantalizing the audience with some of Broadcom's upcoming products -- the fruits of spending 45 percent of revenues on R&D for the past several years, he said. One particularly cool item: a TV on a chip, with features such as Gigabit-speed switching, optical transceiver interfaces, and wireless data capabilities.
— Craig Matsumoto, Senior Editor, Light Reading
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