This is a summary of the second quarter fiscal 2008 earnings call conducted by Broadcom Corp. (BRCM: chart) on July 22, 2008.

Management:
- President, CEO, Director: Scott A. McGregor
- Principal Financial Officer, Senior VP: Eric K. Brandt
- VP, Investor Relations: Peter Andrew

Key Investor Issues:

- Second-quarter net profit was $134.8 million, or 25 cents a share, compared with $34.3 million, 6 cents a share, in the year-ago period.
- The latest results included stock-based compensation expenses of 24 cents per share.
- Revenue was $1.2 billion, up 34% from $897.9 million in the year-ago period.
- Net revenue for the third quarter is expected in the range of $1.25 billion to $1.3 billion.
- The company expects operating expenses to increase to the range of $15 to $20 million.

Second Quarter Highlights:

Despite all of the recent economic concerns in the headlines, Broadcom had a strong quarter. Total revenue for the second quarter came in at $1.2 billion, which represented year-over-year growth of over 30%. In addition, quarterly product revenue excluding royalties surpassed the $1 billion milestone for the first time.

The company was able to keep operating expenses relatively tight, even with much stronger-than-expected revenue.

- Total operating expenses grew $54 million, or 13% year over year, while revenue grew about $300 million, providing positive earnings leverage.
- The combination of strong revenue and tight operating expenses enabled Broadcom to generate $247 million in cash flow from operations.
- Total cash and marketable securities balance was over $2 billion, even after buying back $444 million worth of Broadcom stock in the second quarter.

Broadcom''s traditional wireline businesses that address communication needs at home and work grew revenue at a double-digit percentage rate year over year, while mobile and wireless businesses grew revenue more than 50% year over year.

The market for communications, whether wired or wireless, is large and growing.

This phenomena is occurring all around the world. The company’s recent strength, especially in networking, has been increasingly coming from Asia and Eastern Europe. Broadcom sees worldwide Internet traffic growing strongly, driven by richer content, the deployment of broadband connectivity to new users, and the build-out of supporting network infrastructure.

Record revenue of $1.201 billion, including a $35.6 million royalty in revenue from Verizon, was up approximately 34% from a year ago.

This was also well above the upper end of the range provided in the first quarter earnings call.

GAAP gross margin was 53.8%, up about 40 basis points from last quarter. Included in this number are a 140-basis point impact of the Verizon royalty and a 90-basis point negative impact of stock-based compensation and amortization of purchased intangibles.

Total GAAP operating expenses increased by $29 million over the first quarter.

However, as noted in the first quarter results and guidance during last quarter’s conference call, there are a number of one-time/step-up elements in that quarter.

GAAP earnings per share were $0.25.

This number includes a one-time item associated with the revision to certain assumptions and methodologies relating to the accounting for expense reimbursements relating to directors and officers insurance, which resulted in approximately a $0.01 earnings per share negative impact on the quarter. Excluding this item and the acquisition related items from the second quarter of 2007, roughly $0.02 per share, Broadcom experienced EPS growth in excess of 200% over the second quarter of the prior year.

Stock-based compensation expenses in the quarter were $127 million, or roughly $0.24 per share, of which:
- $90 million or 7.5 points of revenue was in R&D,
- $31 million or 2.6 points of revenue was in SG&A,
- $6 million or 0.5 points of revenue was in COGS.

Cash flow from operations was $247 million.