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Broadcom Reports Record Third Quarter Revenue and Profit.

Business Editors & High-Tech Writers

IRVINE, Calif.--(BUSINESS WIRE)--Oct. 18, 2000

Broadcom Corporation (Nasdaq: BRCM) today reported record revenue and profit for its third fiscal quarter, ended September 30, 2000.

Revenue for the third quarter was a record $319.2 million, an increase of 128.7% over the $139.6 million reported in the third quarter of 1999 and an increase of 30.2% over the $245.2 million reported in the second quarter of 2000. Pro forma net income was a record $78.7 million, or $.30 per share (diluted). This compares with pro forma net income of $28.7 million, or $.12 per share (diluted), for the same quarter in 1999 and with pro forma net income of $61.1 million, or $.24 per share (diluted), in the second quarter of 2000. Diluted earnings per share for the quarter were based on 264.8 million weighted average shares outstanding, compared to 238.3 million weighted average shares outstanding in the third quarter of 1999 and to 253.9 million weighted average shares outstanding in the second quarter of 2000.

Pro forma net income excludes the effects of acquisition-related expenses and payroll taxes on certain stock option exercises. Including these charges, net loss for the third quarter was $19.4 million, or $.09 per share, compared with net income of $24.6 million, or $.10 per share (diluted), in the same quarter in 1999, and with net income of $55.9 million, or $.22 per share (diluted), in the second quarter of 2000.

During the third quarter, Broadcom announced three key acquisitions -- Altima Communications, Inc., Silicon Spice Inc. and NewPort Communications, Inc. -- and closed a fourth acquisition, Innovent Systems, Inc., first announced in June. The Altima transaction also closed within the quarter. All four acquisitions will be accounted for under the purchase method of accounting.

"The 30 percent sequential revenue increase we experienced this quarter was the result of continued strong momentum in the broadband markets we serve," said Dr. Henry T. Nicholas III, President and CEO of Broadcom Corporation. "We saw brisk demand across our business lines, from set-top boxes and cable modems to enterprise networking equipment."

"This across-the-board demand underscored a trend that we are helping to drive: the rapid convergence of broadband technologies and markets," Nicholas said. "A good example of this was our introduction during the quarter of a groundbreaking single-chip cable modem solution that brings together a range of capabilities, including those for set-top boxes, cable modems, home networking, Voice over Internet Protocol and Ethernet connectivity. This product, the BCM3352, allows cable operators worldwide to provide residential gateways capable of delivering four lines of primary line digital telephone, IP video, home networking and `always on' cable modem Internet services over cable systems and home phone lines."

During the quarter, Broadcom significantly expanded its wide area networking (WAN) offerings, announcing the acquisitions of NewPort Communications and Silicon Spice. At the recent Networld+Interop industry trade show, Broadcom demonstrated NewPort's 2.5 Gigabit per second (Gbps) OC-48 and 10 Gbps OC-192 SONET transceivers. Together these products have garnered 37 design wins with leading networking OEMs. The company also demonstrated Silicon Spice's reconfigurable communications processor, showing superior Voice over IP (VoIP) capabilities when paired with both Broadcom's internally-developed technology and telephony software gained last year in the acquisition of HotHaus Technologies.

The Silicon Spice and NewPort Communications acquisitions closed in early October. On October 17, Broadcom further extended its portfolio of WAN products, technologies and expertise, announcing the acquisition of Allayer Communications, a leading developer of high-performance enterprise and optical networking communications chips. Allayer's switch technology supports both 1 Gigabit and 10 Gigabit-per-second Ethernet speeds, and serves as the metropolitan area network (MAN) intersection between access (IP-based) networks and transport (SONET-based) networks.

In enterprise networking, Broadcom made a number of significant announcements during the quarter, including the introduction of its third generation Gigabit Ethernet over copper transceiver, a product which integrates two 10/100/1000 ports on a single chip. Broadcom is the dominant market leader in Gigabit Ethernet over copper, with nearly a million ports of transceivers shipped. This leadership position was further bolstered by the announcement in July that Apple Computer will use Broadcom's Gigabit Ethernet transceiver as a standard part on all of the computer maker's new dual-processor PowerMac G4 systems.

Additionally in the networking area, Broadcom demonstrated the world's fastest e-Commerce security processor, another example of fruits of an earlier acquisition (BlueSteel Networks).

To better serve the small and medium-sized business networking market, Broadcom acquired Altima Communications, which focuses on small business 10/100 Ethernet switches, repeaters and transceivers. These products are designed and optimized for the cost-sensitive, value-oriented customer, with an emphasis on low power consumption, small OEM product footprint, and low total system cost. In this market segment, Broadcom also delivered new 5-port and 8-port expandable 10/100 ROBOswitch-plus family of Ethernet Switch-on-a-Chip products.

On October 4, Broadcom announced the acquisition of Element 14, Inc., a leading developer of high port density, low power DSL chipsets. U.K.-based Element 14 is developing what is anticipated to be the industry's first 12-port, full-rate ADSL solution for the central office (CO). The acquisition is expected to close in the current quarter.

"We believe that the combination of Broadcom's existing leadership position in VDSL with Element 14's ADSL capabilities will provide our markets with the most comprehensive product portfolio available for copper twisted pair broadband delivery," Nicholas concluded.

Broadcom's restated historical consolidated financial statements for 1999, reflecting the effects of the four pooling-of-interest acquisitions completed in 2000 to date, were reported on a Form 8-K/A filed with the Securities and Exchange Commission on July 10, 2000. Broadcom's unaudited pro forma combined financial statements including the effects of the Innovent Systems acquisition were reported on a Form 8-K/A filed with the SEC on October 2, 2000.

About Broadcom

Broadcom Corporation is the leading provider of highly integrated silicon solutions that enable broadband digital transmission of voice, video, and data. Using proprietary technologies and advanced design methodologies, the company designs, develops and supplies integrated circuits for a number of the most significant broadband communications markets, including the markets for cable set-top boxes, cable modems, high-speed local, metropolitan and wide area networks, home networking, Voice over Internet Protocol (VoIP), carrier access, residential broadband gateways, direct broadcast satellite and terrestrial digital broadcast, optical networking, digital subscriber lines (xDSL) and wireless communications. Broadcom is headquartered in Irvine, Calif., and can be contacted at 949-450-8700 or at www.broadcom.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This release may contain forward-looking statements based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will" and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.

Important factors that may cause such a difference for Broadcom include, but are not limited to, the volume of our product sales and pricing concessions on volume sales; the timing, rescheduling or cancellation of significant customer orders; the loss of a key customer; the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; silicon wafer pricing and the availability of foundry and assembly capacity and raw materials; our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a timely manner; the timing of customer-industry qualification and certification of our products and the risks of non-qualification or non-certification; the rate at which our present and future customers and end-users adopt Broadcom's technologies and products in the markets for cable set-top boxes, cable modems, high-speed local, metropolitan and wide area networks, home networking, VoIP, carrier access, residential broadband gateways, direct broadcast satellite and terrestrial digital broadcast, optical networking, xDSL and wireless communications; delays in the adoption and acceptance of industry standards in the foregoing markets; the risks inherent in our acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, costs and unanticipated expenditures, changing relationships with customers, suppliers and strategic partners, potential contractual, intellectual property or employment issues, accounting treatment and charges, and the risks that the acquisition cannot be completed successfully or that anticipated benefits are not realized; intellectual property disputes and customer indemnification claims; fluctuations in the manufacturing yields of our third party semiconductor foundries and other problems or delays in the fabrication, assembly, testing or delivery of our products; the risks of producing products with new suppliers and at new fabrication and assembly facilities; problems or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration; the effectiveness of our product cost reduction efforts; the effects of new and emerging technologies; the risks and uncertainties associated with our international operations; our ability to retain and hire key executives, technical personnel and other employees in the numbers, with the capabilities, and at the compensation levels needed to implement our business and product plans; changes in our product or customer mix; the quality of our products and any remediation costs; the effects of natural disasters and other events beyond our control; the level of orders received that can be shipped in a fiscal quarter; potential business disruptions, claims, expenses and other difficulties resulting from residual "Year 2000" problems in computer-based systems used by us, our suppliers or our customers; general economic conditions and specific conditions in the markets we address; and other factors.

Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Forms 8-K and 8-K/A, and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Broadcom(R) and the pulse logo are trademarks of Broadcom Corporation and/or its affiliates in the United States and certain other countries. All other trademarks mentioned are the property of their respective owners.


 BROADCOM CORPORATION
 Unaudited Pro Forma Consolidated Statements of Operations
 (In thousands, except per share amounts)

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2000 1999 2000 1999

Revenue $ 319,155 $ 139,561 $ 755,923 $ 359,227
Cost of revenue 135,359 56,261 316,496 145,162
Gross profit 183,796 83,300 439,427 214,065
Operating expense:
 Research and
 development 62,502 30,234 153,990 82,560
 Selling, general and
 administrative 27,817 14,610 67,545 42,175
Income from operations 93,477 38,456 217,892 89,330
Interest and other
 income, net 4,934 2,156 12,984 5,869
Income before
 income taxes 98,411 40,612 230,876 95,199
Provision for
 income taxes 19,682 11,904 46,175 27,131
Pro forma net income $ 78,729 $ 28,708 $ 184,701 $ 68,068
Pro forma basic
 earnings per share $ .36 $ .14 $ .86 $ .34
Pro forma diluted
 earnings per share $ .30 $ .12 $ .72 $ .29
Weighted average
 shares (basic) 220,510 203,756 215,444 199,660
Weighted average
 shares (diluted) 264,812 238,333 257,111 232,469

 Pro Forma Only

 The above pro forma statements are based upon our unaudited
consolidated statements of operations for the periods shown, with
certain adjustments. The pro forma statements for the three months
ended September 30, 2000 have been adjusted to eliminate $45.7 million
of in-process research and development expense; $8.3 million of
payroll tax expense on certain stock option exercises; $27.6 million
of stock-based compensation expense related to mergers and
acquisitions ("M&A"); and $24.9 million of amortization of goodwill
and purchased intangibles related to M&A; and reflect a pro forma
effective tax rate of 20%.
 The pro forma statements for the three months ended September 30,
1999 have been adjusted to eliminate $.7 million of payroll tax
expense on certain stock option exercises; $1.0 million of stock-based
compensation expense; and $4.1 million of merger-related expense; and
reflect a pro forma effective tax rate of 29.3%.
 The pro forma statements for the nine months ended September 30,
2000 have been adjusted to eliminate $45.7 million of in-process
research and development expense; $14.8 million of payroll tax expense
on certain stock option exercises; $30.7 million of stock-based
compensation expense related to M&A; $24.9 million of amortization of
goodwill and purchased intangibles related to M&A; and $4.7 million of
merger-related expense; and reflect a pro forma effective tax rate
of 20%.
 The pro forma statements for the nine months ended September 30,
1999 have been adjusted to eliminate $2.9 million of payroll tax
expense on certain stock option exercises; $2.8 million of stock-based
compensation expense; $15.2 million of merger-related expense; and
$17.0 million of litigation settlement costs; and reflect a pro forma
effective tax rate of 28.5%.
 All historical financial information has been restated to give
retroactive effect to acquisitions accounted for using the
pooling-of-interests method.



 BROADCOM CORPORATION
 Unaudited Consolidated Statements of Operations
 (In thousands, except per share amounts)

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2000 1999 2000 1999

Revenue $ 319,155 $ 139,561 $ 755,923 $ 359,227
Cost of revenue
 (1)(2) 135,908 56,308 317,430 145,316
Gross profit 183,247 83,253 438,493 213,911
Operating expense:
 Research and
 development (1)(2) 67,945 30,635 163,350 84,295
 Selling, general
 and administrative
 (1)(2) 30,148 14,869 72,097 43,211
 Stock-based
 compensation 27,615 959 30,655 2,816
 Amortization of
 goodwill and
 purchased intangible
 assets 24,936 -- 24,936 --
 In-process research
 and development 45,660 -- 45,660 --
 Merger-related costs -- 4,088 4,745 15,210
 Litigation settlement
 costs -- -- -- 17,036
Income (loss) from
 operations (13,057) 32,702 97,050 51,343
Interest and other
 income, net 4,934 2,156 12,984 5,869
Income (loss) before
 income taxes (8,123) 34,858 110,034 57,212
Provision for
 income taxes 11,241 10,264 34,872 17,730
Net income (loss) $ (19,364) $ 24,594 $ 75,162 $ 39,482
Basic earnings (loss)
 per share $ (.09) $ .12 $ .35 $ .20
Diluted earnings (loss)
 per share $ (.09) $ .10 $ .29 $ .17
Weighted average
 shares (basic) 220,510 203,756 215,444 199,660
Weighted average
 shares (diluted) 220,510 238,333 257,111 232,469

Notes

 All historical financial information has been restated to give
retroactive effect to acquisitions accounted for using the
pooling-of-interests method.

 (1) Excludes stock-based compensation expense as follows:

Cost of revenue $ 615 $ 37 $ 690 $ 112
Research and
 development 20,636 659 22,789 1,879
Selling, general and
 administrative 6,364 263 7,176 825

 $ 27,615 $ 959 $ 30,655 $ 2,816

 (2) Includes employer payroll tax expense on stock option
exercises as follows:

Cost of revenue $ 549 $ 47 $ 934 $ 154
Research and
 development 5,443 401 9,360 1,735
Selling, general and
 administrative 2,331 259 4,552 1,036

 $ 8,323 $ 707 $ 14,846 $ 2,925



 BROADCOM CORPORATION
 Unaudited Condensed Consolidated Balance Sheets
 (In thousands)

 September 30, December 31,
 2000 1999
ASSETS
Current assets:
 Cash and cash equivalents $ 377,813 $ 180,816
 Short-term investments 104,570 90,059
 Accounts receivable, net 152,484 92,124
 Inventory 44,471 19,177
 Deferred taxes 8,980 8,380
 Other current assets 25,807 12,950
 Total current assets 714,125 403,506
Property and equipment, net 85,961 51,151
Long-term investments -- 9,351
Deferred taxes 293,766 137,779
Goodwill and purchased intangible
 assets, net 1,354,419 --
Other assets 24,963 7,966
 Total assets $ 2,473,234 $ 609,753


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Trade accounts payable $ 92,818 $ 46,458
 Accrued liabilities 68,405 41,561
 Current portion of long-term
 debt 1,152 1,787
 Total current liabilities 162,375 89,806
Long-term debt, less current
 portion 702 3,075
Shareholders' equity 2,310,157 516,872

 Total liabilities and
 shareholders' equity $ 2,473,234 $ 609,753

 All historical financial information has been restated to give
retroactive effect to acquisitions accounted for using the
pooling-of-interests method.
COPYRIGHT 2000 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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