UPDATE 2-Broadcom Q1 earnings meet lowered analyst estimates
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(adds detail from conference call, previous IRVINE)
By Timna Tanners
LOS ANGELES, April 18 (Reuters) - High-speed communications
semiconductor maker Broadcom Corp. on Wednesday posted
first-quarter earnings that met the company's lowered guidance,
despite weaker orders from primary customers.
Pro forma net income, which excludes merger-related
expenses and payroll taxes on stock option exercises, was $24.2
million, or 9 cents a diluted share, down from $44.9 million,
or 18 cents a share, in the year-ago quarter.
The results met the Wall Street consensus analyst earnings
forecast for the Irvine, Calif.-based company of 9 cents a
share, according to research firm Thomson Financial/First Call.
Earnings estimates from nine brokers ranged from 7 to 9 cents.
Net revenues rose 62 percent year-over-year to $310.5
million from $191.6 million in the first quarter of 2000, but
fell sequentially from the fourth quarter, when it posted
revenues of $376.1 million.
The company also said it would trim jobs in its current
quarter to cut costs, but did not provide details on how many
employees it would cut. The company joins a flock of other
communications and networking chipmakers that have looked to
cut costs as their share prices tumble.
Broadcom lowered earnings expectations a month ago to
reflect weakness in the quarter from its three major customers:
Cisco Systems Inc. , Motorola Inc. and 3Com
Corp. , which all have been hit by weaker economic
conditions that have taken a toll on the entire tech sector.
Shares of Broadcom have underperformed the tech-heavy
Nasdaq, falling some 60 percent since the start of the year
compared with the Nasdaq's 16 percent decline. In contrast, the
Philadelphia semiconductor index <.SOXX> is up about 7 percent
from levels at the start of the year.
Broadcom shares closed up 15.7 percent on the Nasdaq, up
$4.61 to $34.01. In after-hours Instinet trade the share price
rose to ashigh as $36.20.
A DIM OUTLOOK
"Looking ahead, as a result of the continued weakness in
the communications sector, we have not yet seen improvement in
order visibility from customers," said Henry Nicholas, Broadcom
president and chief executive officer.
He noted in a conference call with analysts this was the
first quarter the company was not posting an increase in profit
or revenue, and noted that there was an inventory bubble in
several of its key markets. Nicholas noted excessive
inventories in the cable set-top and networking markets.
Executives said they expected continuing soft orders from
main customers, and general market weakness hurt its second
quarter results.
William Ruehle, Broadcom chief financial officer, said the
company expected gross revenues to fall in the second quarter
by up to 23 percent from first quarter levels. The company
expects to report a pro forma loss of between 7 and 9 cents, he
added.
The range of estimates from 18 analysts for the quarter was
between an 11-cent profit and a loss of three cents a share
with the consensus estimate of a six-cent profit.
CEO Nicholas said its headcount reduction would be
material, but said the companies would continue to hire in
areas it deems strategic.
Broadcom also outlined the percentage of sales accounted
for by its three top customers. Motorola Inc. comprised
19.8 percent of revenues, while 3Com Corp. accounted
for 15.1 percent of revenues and Cisco Systems'
percentage of sales slipped to less than 10 percent.
Including charges, the net loss for the first quarter was
$356.9 million, or $1.43 a share, compared with a profit of
$38.6 million, or 15 cents a share, last year.
REUTERS
Rtr 23:15 04-18-01 |
