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Earnings Calls: 
Broadcom Fourth Quarter Earnings Call
Author: Rozalina Destanova
123jump.com
Last Update: 4:01 AM EDT April 08 2008

Net revenue was $923.5 million, better than expected and due to strong demand for some of customers’ consumer products in the holiday season. Board of Directors has approved a new share repurchase plan for up to $1 billion. Non-GAAP gross margin of 51.9% was up 90 basis points from last quarter and within long-term model of 50% to 52%. Non-GAAP operating expenses were up $30 million from Q3 levels due to increase investments in new product areas.

Investors Question and Answers

 
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Sequential Earnings Growth | Quarterly Earnings by Year | Quarterly Earnings Growth by Year

Source: Company filings    Q1:March  Q2:June  Q3:September  Q4:December
 
This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Broadcom Corp. (BRCM: chart) on February 8, 2007.

Management:

Vice President of Investor Relations: T. Peter Andrew
President and Chief Executive Officer: Scott A. McGregor
Acting Chief Financial Officer, Principal Accounting Officer, Vice President and Corporate Controller: Bruce E. Kiddoo
Key Investors Issues

Key Investors Issues

- EPS were 8 cents per share compared to 32 cents per share for the fourth quarter of 2005.
- Net income was $45.1 million compared to $186.7 million last year.
- Net revenue was $923.5 million compared to $820.6 million for the fourth quarter of 2005.

Fourth Quarter Highlights

Net revenue was $923.5 million, an increase of 2.3% from the $902.6 million reported for the third quarter of 2006 and an increase of 12.5% from the $820.6 million reported for the fourth quarter of 2005.

- Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) was $45.1 million, or 8 cents per share, compared with GAAP net income of $110.2 million, or 19 cents per share, for the third quarter of 2006, and GAAP net income of $186.7 million, or 32 cents per share, for the fourth quarter of 2005. Had the company applied the provisions of SFAS 123R in 2005, it would have recorded an additional $90.1 million in stock-based compensation expense and reported GAAP net income of $96.6 million, or 17 cents per share, for the fourth quarter of 2005.

- GAAP net income is after $50.6 million of charges for payments Broadcom is making to or on behalf of certain current and former employees related to consequences of the company''s recent equity award review, as well as non-cash stock-based compensation expense incurred related to the extension of the post-service stock option exercise period for certain former employees.
- Non-GAAP net income computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $184.9 million or 31 cents per share compared with non-GAAP net income of $191.4 million, or 32 cents per share for the third quarter of 2006, and $196.8 million, or 34 cents per share for the fourth quarter of 2005.

Fiscal 2006 Highlights

- Net revenue was $3.67 billion, an increase of 37.3% from the $2.67 billion reported for the year ended December 31, 2005.
- GAAP net income was $379.0 million, or 64 cents per share, compared with GAAP net income of $367.1 million, or 66 cents per share for the year ended December 31, 2005. Had the company applied the provisions of SFAS 123R in 2005, it would have recorded an additional $461.9 million in stock-based compensation expense and reported a GAAP net loss of $94.8 million, or 19 cents per share (basic and diluted), for the year ended December 31, 2005.

- Non-GAAP net income computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $822.5 million or $1.35 per share, compared with non-GAAP net income of $548.6 million, or 98 centss per share, for the year ended December 31, 2005.
- The company''s cash, cash equivalents and marketable securities at December 31, 2006 totaled a record $2.8 billion, an increase of $247.2 million over the comparable balance at September 30, 2006, and an increase of $926.1 million over the comparable balance at December 31, 2005.

Key questions from the fourth quarter earnings call conducted by Broadcom Corp. on February 8, 2007.

Michael Masdea (Credit Suisse): Could you expand on the $50.6 million charge?

Bruce Kiddoo: It is not a recurring charge. It was primarily related to employee related expenses related to our equity award review. The items in there where relate to our employee stock purchase plan, where we were unable to do a purchase while F8 was suspended. It was also related to exercise periods from employees that had terminated and we had to extend that. In general it was all expense that were solely related to the impact of our S8 being suspended and the impact on employees. With the Broadcom management philosophy that we were not going to penalize our employees due to something that was outside of their control.

Michael Masdea (Credit Suisse): What Broadcom charge is going to be this year versus last year?

Bruce Kiddoo: We run about 100 million to 120 million a quarter. That is going to be consistent year-on-year.

Michael Masdea (Credit Suisse): 3Gs have been slower to rollout you were hoping to have a better position 3G. Is that having an impact at all on your designs or your thoughts or the timing of that market?

Scott McGregor: No. We feel comfortable with where we are on our product offerings and where we see the market going.

Michael Masdea (Credit Suisse): What the real market trends are versus some of the inventories?
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