BRCM ($13-$10)..PE=0....in line...guides flat..
17-Oct-02
16:20 ET Broadcom reports in-line Q3 (BRCM) 12.45 +0.95: -- Update -- Reports Q3 pro forma loss of $0.03, in line with the Multex consensus; revs were $290.0 mln, vs consensus of $289.3 mln.
Reuters
Broadcom's net loss narrows, sees flat revenues
Thursday October 17, 8:26 pm ET
By Jim Christie
(Updates with background, CEO and analyst comments, prices; adds byline, previous IRVINE, Calif.)
SAN FRANCISCO, Oct 17 (Reuters) - Communications chip maker Broadcom Corp. (NasdaqNM:BRCM - News) reported on Thursday a narrower quarterly loss from a year earlier as revenues rose almost 36 percent on the strength of its networking products.
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But Irvine, California-based Broadcom cautioned that current revenues would be flat from the third-quarter and below Wall Street expectations because of weakness in the market for television set-top boxes, for which it supplies chips.
Broadcom said it would cut operating expenses by 10 percent to 12 percent by the start of the first quarter of next year to lower its break-even point, a move investors had wanted for some time, analysts said.
Broadcom's shares initially jumped following the announcements but then retreated to $11.50 in after-hours trade on the lower guidance, down from a Nasdaq close of $12.45.
Broadcom posted a third-quarter net loss of $183.3 million, or 68 cents a share, compared with a year-earlier net loss of $1.6 billion, or $6.36 a share. Revenue was up 35.8 percent to $290 million from $213.6 million a year earlier.
Excluding charges, Broadcom recorded a loss of $9.1 million, or 3 cents a share, compared with a loss of $34 million, or 13 cents a share, a year earlier.
Analysts surveyed by tracking firm Thomson First Call had expected, on average, that Broadcom would post a loss excluding charges of 3 cents per share on revenues of $288.7 million.
Broadcom President and Chief Executive Henry Nicholas said the chipmaker would cut costs to return to profitability.
"Prior to this quarter, the No. 1 focus of the company was securing entry into new markets," including wireless, direct broadcast satellite and digital video recording, Nicholas told Reuters. "Now that we've achieved that, we're turning back around and saying it's time to restructure."
FLAT FOURTH-QUARTER REVENUES
Broadcom expects fourth-quarter revenue to be flat with third-quarter revenue, noting its "prudent" view reflects signs of softness in its digital-television set-top-box market.
However, Broadcom said it expects continued strength in the market for its chips for networking products.
Broadcom's chips are used in digital-TV set-top boxes, servers, cable modems and networking gear. The company's top customers in the past quarter were Hewlett-Packard Co. (NYSE:HPQ - News), Dell Computer Corp. (NasdaqNM:DELL - News) and Cisco Systems Inc. (NasdaqNM:CSCO - News), each accounting for 10 percent of revenue or more, it said.
Jeremy Bunting, an analyst with Thomas Weisel Partners, said that Broadcom's results and outlook were a "mixed bag."
Softness in the digital-TV set-top box market was disappointing, but Broadcom's campaign to cut costs was encouraging, Bunting said.
Other analysts agreed.
"Investors had been concerned they were growing revenues but were not profitable," said Jim Liang of Pacific Growth Equities. "The expense reductions are a very positive step."
Nicholas said the cuts would lower the company's break-even point, before charges, to below $300 million in quarterly revenues.
The cost cuts will come from operating efficiencies, lower head count and reductions in capital spending, Nicholas said. The company did not specify the number of jobs to be cut.
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