Broadcom posts narrower loss than expected
(recasts lead, updates throughout with guidance, executive, analyst comment)
SAN FRANCISCO, April 17 (Reuters) - Semiconductor designer Broadcom Corp. (NasdaqNM:BRCM - news) on Wednesday reported a narrower first quarter loss on stronger than expected sales of networking and ServerWorks business products, and the company projected sequential revenue growth for the next two quarters.
Revenue in the second quarter is expected to grow ``in mid single-digits'' in percentage terms and ``in low double-digits'' in the third quarter, not including Mobilink Telecom which Broadcom is in the process of acquiring, said William Ruehle, chief financial officer for the communications semiconductor designer.
``We have a reasonable level of visibility on our business,'' Ruehle said in an interview. ``Our customers typically order three months ahead of time, but we deal with a number of very large customers and they give us long-term forecasts, and over time, we've learned how to calibrate their forecasts.''
For the first quarter, Irvine, California-based Broadcom reported a net loss of $166.1 million, or 63 cents a share, compared with a year-ago net loss of $356.9 million, or $1.43 a share. Revenue declined to $238.8 million, a 23 percent drop from $310.5 million a year ago, but rose 5.3 percent from $226.8 million in the fourth quarter.
Excluding one-time expenses and charges including stock-based compensation, restructuring costs and amortization of purchased intangible assets, Broadcom said it had a pro forma loss of $21.9 million, or 8 cents a share, compared with year-ago pro forma profit of $18.1 million, or 6 cents per share.
Analysts were expecting a loss of 10 cents a share, within a range of a loss of 7 cents to a loss of 11 cents, on revenue of $236 million.
Analysts on average expect the company to post second-quarter revenue of $257 million and third-quarter revenue of $285 million, according to Thomson Financial/First Call.
New Broadcom products that are scheduled to ramp up in coming quarters are expected to start having a major impact in the fourth quarter, Ruehle said.
``A lot of the story is new product and new market opportunity,'' said Sandy Harrison, of Banc of America Securities, citing security and general purpose processors and wireless local area network products.
``The risk is that those markets may not gel as quickly as we would hope,'' said Harrison. ``But there's a lot of opportunity in that the sky's the limit at this point.''
Analysts praised the company's leadership position in its existing markets, which include servers, Ethernet networking products, set-top boxes and cable modems.
``This is a broadly diversified company in multiple end markets,'' said Jim Liang, an analyst at Pacific Growth Equities. ``As a result, the company is continuing to see sequential growth given the completion of the inventory correction that basically caused the downturn of the sector'' last year.
Broadcom shares rose 24 cents on the Nasdaq to close at $38.60. The stock has declined more than 5 percent this year, compared with a more than 15 percent increase in the Philadelphia Semiconductor Index, a proxy for the sector.
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