BRCM ($32-$29)eps -$12...Cap=$7.6Bil....posts Q3 loss, revenues stabilize
siliconinvestor.com
IRVINE, Calif., Oct 17 (Reuters) - Communications chip maker Broadcom Corp. (NasdaqNM:BRCM - news) on Wednesday reported a third-quarter loss before charges that was slightly narrower than expected as revenue stabilized and margins improved after the recent slump in sales of chips for networking equipment and servers.
Broadcom, which makes communications chips for cable modems and other networking equipment, projected revenues would rebound by up to 5 percent in the current quarter, bringing sales to near $225 million.
Shares in Broadcom, which closed down 12 percent at $28.07 on Nasdaq on Wednesday, rallied to regain a portion of that loss in after-hours trade, reaching $29 on the Instinet system.
On a conference call with analysts, Broadcom executives held back from providing any guidance for 2002, citing the economic uncertainties that have after the Sept. 11 attacks on New York and Washington.
Even so, some analysts were ready to cautiously call a bottom for the company, which had seen sales and its share price plunge with the downturn in spending on communications gear.
``We believe the worst of the downturn is behind and Broadcom is well-positioned to experience strong growth when the upturn starts,'' said WR Hambrecht analyst Jim Liang in a research note.
Including a massive $1.18 billion write down on the value of acquisitions, Broadcom reported a loss of $1.6 billion, or $6.36 per share, compared with a net loss of $14 million, or 6 cents per share, in the year-earlier period.
The net loss also reflected a $16 million restructuring charge, including a cash payment of $13 million related to severance for laid off workers and the closure of some facilities. Broadcom continued to hire and ended the quarter with about the same work force as it had when the quarter began, executives said.
Revenues were $214 million, up from $211 million in the prior quarter but still down sharply from the $319 million recorded in the third quarter of 2000.
Excluding the charges, Broadcom posted a loss of $34 million, or 13 cents per share, compared with a profit of $79 million, or 30 cents per share in the year-earlier period. The company forecast that the pro forma loss per share would be about 12 cents in the current quarter.
The average estimate of 20 brokers polled by Thomson Financial/First Call had been for a pro forma loss of 15 cents, with a range of a loss of 14 cents to 18 cents for the September-ending quarter.
Gross margins for the company, rose to 47.1 percent from 46 percent in the prior quarter.
The quarter was in line with Broadcom's dramatically reduced expectations from June, Chief Financial Officer William Ruehle told Reuters.
``Turning the quarter is a little dramatic, but there was some stability,'' Ruehle said. ``Our revenues were right in line.''
Despite the massive write-down on acquisitions that it took in the quarter, Broadcom ended the quarter with $653 million in cash, down from $665 million in the previous quarter, Ruehle said.
A large part of the improvement in margins resulted from better production efficiencies in Broadcom's StrataSwitch, network products, which control data flows at high speed on corporate networks.
Two of the Broadcom's major customers in the quarter were Motorola Inc. (NYSE:MOT - news), which accounted for almost 22 percent of revenue up from 14 percent in the prior quarter, and Compaq Computer Corp (NYSE:CPQ - news), which accounted for just over 10 percent of revenue for the first time, the company said.
Broadcom shares have rallied since early October but is still off some 67 percent this year, underperforming the benchmark Philadelphia Stock Exchange Semiconductor index which is down about 26 percent. |
