Broadcom breezes by 2Q forecasts

Broadcom Corp. (Nasdaq: BRCM) more than quadrupled its earnings on the way to posting second quarter profits easily ahead of analyst expectations.

In results released after market close Wednesday, the maker of networking chips reported pro forma net income of $21.2 million, or 19 cents a share, excluding one-time charges. First Call's survey of 10 analysts predicted a per-share profit of 16 cents.

Second quarter sales rose to $116.3 million, up 157 percent from $45.2 million in the year ago period, when Broadcom earned $4.9 million, or 5 cents a share, on a pro forma basis. "This was an important quarter for Broadcom as we continued to demonstrate strong financial performance and sales strength in all of our markets, while making a number of key strategic moves in acquisitions and product offerings," said Henry T. Nicholas III, Broadcom's president and CEO. "With these moves, we have enhanced our world-wide leadership position as an Internet-enabler and broadband technology provider."

Broadcom recorded one-time, pre-tax charges totaling $11.1 million related to the acquisitions of Maverick Networks, Epigram, and Armedia. Broadcom also saw non-recurring charges of $17 million for settling two lawsuits. Including those expenses, Broadcom saw net income of $2.8 million, or 3 cents a share.

The largest maker of chips for cable modems, Broadcom predicted growing demand for Internet services over coaxial cable lines. The company said it provides chips for nine of 10 modems certified for system interoperability by industry standards group Cable Television Laboratories. All three CableLabs-certified vendors of head-end equipment for cable networks use Broadcom chips, the company said.

Broadcom is starting to move into the market for high-speed corporate networks. More than two dozen samples of Broadcom's chip for Gigabit Ethernet systems have been shipped, the company said.

Shares of Broadcom retreated 3/4 to 131 1/4 in Wednesday's trading prior to the earnings report. Of a dozen analysts surveyed by Zack's Investment Research, seven maintain the equivalent of "moderate buy" ratings on Broadcom, three recommend the stock as a "strong buy", and two have "hold" ratings.>