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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: JeffreyHF who wrote (6447)	9/8/2006 11:34:37 AM
From: engineer	Read Replies (2) \| Respond to of 6531

The board only gets more greedy..... Broadcom's Backdating Charge Doubles to $1.5 Billion (Update5) By Rebecca Barr Sept. 8 (Bloomberg) -- Broadcom Corp., a maker of computer chips for consumer devices, said it discovered more instances of stock-option backdating that will require the company to at least double its charge for the practice to $1.5 billion. The company's 1998 and 1999 earnings must be restated, Broadcom said today in a statement. Most of the non-cash charge will be expensed in the periods through the end of 2003. The restatement is the biggest yet among at least 120 companies facing federal probes or conducting internal reviews into whether they manipulated dates to inflate the value of options. In July, Broadcom said it would take a $750 million charge after an audit committee found options backdating from 2000 to 2002. That review continues. ``More serious than effect on share price is what it says for the culture of the company,'' said Michael Cohen, an analyst for San Diego-based Pacific American Securities. ``In addition to straightening out the accounting, these companies should find the wrongdoers and get some recovery for shareholders.'' Shares of Irvine, California-based Broadcom slipped 76 cents, or 2.9 percent, to $25.67 at 10:45 a.m. New York time in Nasdaq Stock Market composite trading. Before today, they had fallen 46 percent from this year's March 2 peak. Broadcom, which is also under an informal probe by the U.S. Securities and Exchange Commission, said the U.S. Attorney's Office for the Central District of California asked for some documents already requested by the SEC. Profit, Loss The $1.5 billion would be more than twice as much as the $727.5 million in total net income Broadcom reported for its four profitable years since going public in 1998, according to data compiled by Bloomberg. The company had $6.63 billion in net losses for the other four years. ``Stockholders are hit twice,'' said Cohen who rates Broadcom's stock ``buy'' and said he doesn't own it. ``First you're stolen from, then the stock goes down when the theft is uncovered.'' The company said it has found no instances of option backdating after May 2003 and neither founders Henry Samueli and Henry Nicholas nor any board members board past or present have profited from the disputed options. ``I suspect investors will now look at what they expect from Broadcom management in the future, and with the current management team in place,'' said Marc Siegel, director of research at the Center for Financial Research & Analysis in Rockville, Maryland. Restatements More than 40 companies have said they will restate earnings or might have to do so when internal probes are completed. The restatements total at least $2.27 billion so far, according to Bloomberg data. Broadcom's is the biggest announced to date. Federal investigators are scrutinizing stock-option grants that may have been backdated or carefully timed to coincide with days when the stock price was low to enrich the recipients. Such grants can hide costs, distort taxes, and obscure a company's true financial condition, and could be criminal acts if not properly disclosed. Stock options allow recipients to buy shares at a future date, usually at the price on the day they were granted. They are given to managers as an incentive to find ways to boost the stock price. Broadcom in July said as much as 95 percent of its options are awarded to employees below executive officer level. Subverts Purpose Prosecutors and members of Congress have said backdating grants, or awarding them shortly before good news is announced, subverts their purpose and could involve criminal fraud. SEC Chairman Christopher Cox told Congress this week that more than 100 companies are being investigated. Executives at Comverse Technology Inc. and Brocade Communications Systems Inc. face criminal charges, and Cox said more enforcement actions will follow. Broadcom's extra charges announced today concern options awarded between June 1998 and May 2003, a period that hadn't been assessed by the audit committee when the preliminary expense was announced in July. Linear Technology Corp. today said the U.S. Internal Revenue Service requested information about its options-granting practices. The company, which makes computer chips for cell phones and satellite systems, already had disclosed that the SEC and the Justice Department are conducting informal inquiries into the options. To contact the reporter on this story: Rebecca Barr in New York at rbarr1@bloomberg.net . Last Updated: September 8, 2006 10:48 EDT