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Broadcom's Profit Beats Forecasts

October 13, 1998

Broadcom Corp., which makes chips used in computer networking equipment, reported a third-quarter profit slightly higher than forecasts, while sales surged.

The Irvine company said it earned $8.2 million, or 17 cents a share, compared to a loss of $1.8 million, or 7 cents, a year ago. The company was expected to earn 16 cents a share, based on a survey by First Call Corp.

Broadcom revenue totaled $52.5 million, up from $9.3 million.

Broadcom's products are used in cable modems and other equipment that connects computers and other devices to the Internet at high speeds. The company has won contracts from many of the largest makers of networking and telecommunications equipment, all of whom are looking to make faster equipment to handle the surge in data traffic.

"They're in the sweet spot of the market," said Craig Johnson, an analyst with market researcher Pita Group in Portland, Oregon.

The company announced its quarterly earnings after the market closed. Its shares rose $9.13 to $71.25 after the company earlier in the day unveiled a chip that likely will cut the cost of making low-cost computer switches.

Broadcom said the chip is being tested by Cisco Systems Inc., Northern Telecom Ltd.'s Bay Networks unit and other networking companies.

The chip integrates so-called Ethernet switching functions into its design and will likely drive down the cost of gear sold to small businesses and corporate departments. The product is expected to be shipping in volume by the fourth quarter, said Marty Colombatto, Broadcom's vice president of networking products.

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