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Broadcom beats expectations

The communications chipmaker, which has acquired about a dozen companies over the past year, bests Wall Street by a penny.

    Communications chipmaker Broadcom on Tuesday reported fourth-quarter earnings that topped Wall Street estimates by a penny.

    The company also asserted the economy's slowdown won't keep it from meeting expectations for the current quarter.

    "We beat the numbers again," Henry Nicholas, Broadcom's CEO, said in an interview. "Everyone's blowing up. We aren't."

    Excluding charges related to acquisitions and payroll, the company reported earnings of $86.7 million, or 32 cents per share, on revenue of $376.1 million. That compares with earnings of $32 million, or 13 cents per share, in the fourth quarter of 1999 on revenue of $162 million.

    Analysts had expected Irvine, Calif.-based Broadcom to report earnings of 31 cents per share, according to a consensus of analysts polled by First Call. Revenue estimates from several analysts were in the range of $370 million to $380 million.

    Including the charges, which were largely noncash, net loss for the fourth quarter was $768.6 million, or $3.28 per share.

    Broadcom shares surged in after-hours trading to $141.62. In regular trading, the company's stock closed up $4.63, or 3.6 percent, at $133.44.

    Broadcom has acquired roughly a dozen companies in the past year, including four in the fourth quarter. Those were DSL (digital subscriber line) product maker Element 14, high-speed networking chipmaker Allayer Communications, video compression chipmaker VisionTech, and networking chipmaker SiByte. Earlier this month, Broadcom acquired chipset maker ServerWorks.

    Broadcom predicted continued strong results ahead, saying it expects to meet analyst expectations for the coming quarters.

    William Ruehle, the chief financial officer, predicted that first quarter revenue will increase 22 to 23 percent above fourth quarter levels, including about $50 million in additional revenue from the ServerWorks acquisition. Per-share earnings should be about 33 cents, excluding acquisition and other one-time charges.

    For the full year, Broadcom expects revenue to approximately double 2000 revenue, with earnings per share, excluding charges, of $1.50 to $1.60

    Broadcom added 700 employees in the fourth quarter, bringing the total number of employees to 2,500 at year's end. Of the new employees, 500 came from acquisitions and 200 from expansion in Broadcom's existing businesses.

    The company said its top three customers made up 54 percent of fourth quarter sales, with 3Com accounting for 22 percent of sales, Motorola accounting for 20 percent, and Cisco Systems for 12 percent.

    Even though some of its customers are experiencing slower growth, Nicholas said in an interview, Broadcom has kept growing by entering new markets and increasing its silicon content in the products it already provides chips for.

    Nicholas added that Broadcom is well positioned to ride out the downturn in the overall economy.

    "No one is impervious to a slowdown, but I would say we have as good or better immunity to any slowdown as any chip company out there."