Broadcom 4th quarter profit drops

Semiconductor maker Broadcom Corp., whose chips are used in cell phones and Apple's iPod, said fourth-quarter profits plunged 76 percent on charges related to how it previously accounted for stock options grants.

The Irvine-based company reported net income of $45.1 million, or 8 cents per share in the three months ended Dec. 31, 2006, compared with $186.7 million, or 32 cents per share, in the year earlier period.

The most recent results included the expense of stock-based compensation as well as payments made after the company's investigation into its accounting of stock options grants found irregularities.

Other charges included $6 million in legal and accounting costs associated with its stock options investigation.

Excluding one-time charges, the company said its fourth-quarter net income would have been $184.9 million, or 31 per share, compared to $196.8 million, or 34 per share in the prior year period.

Fourth-quarter revenue rose 12.5 percent to $923.5 million compared with $820.6 million in the same period of 2005.

Analysts surveyed by Thomson Financial had expected earnings of 31 cents per share on revenue of $910.5 million.

Last month, Broadcom said it would record $2.22 billion in non-cash expenses for the years 1998 through 2005 for stock option accounting flaws _ nearly triple what it originally estimated last July.

An internal audit found that co-founder Henry T. Nicholas III had significant responsibility for improperly backdated stock options.

Broadcom's option grants are the subject of a formal inquiry by the Securities and Exchange Commission and an informal inquiry by federal prosecutors.

Fourth-quarter charges also included $50.6 million for payments Broadcom is making to or on behalf of some current and former employees who were unable to purchase company stock during the time the company was not compliant with federal filing requirements.

The company also decided to reimburse some employees whose stock options expired or would have expired during the time the company was not complying with federal requirements to file its financial reports in a timely manner.

Shares of Broadcom gained 17 cents to $33.67 in Thursday trading on the Nasdaq Stock Market. After the results were announced, they rose to $34.17 in extended-session trading.