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Broadcom's Earnings Surge in 4th Quarter

High-tech: Irvine firm also reports revenue leaping to $70.1 million from $17.3 million, as chip-making market expands.

January 27, 1999|JONATHAN GAW | TIMES STAFF WRITER

With its stock soaring, Irvine-based Broadcom Corp. reported particularly strong fourth-quarter earnings Tuesday, handily surpassing Wall Street's estimates.

The developer of high-speed data transmission technologies said it benefited from strong shipments of computer chips for digital set-top boxes for cable television and chips for high-speed networking products.

Broadcom said it earned $12.8 million, or 26 cents a share, for the fourth quarter, up from $2.5 million, or 6 cents a share, a year earlier. Analysts had estimated earnings of 20 cents a share, according to a survey by First Call Corp.

Revenue more than quadrupled, climbing to $70.1 million from $17.3 million.

Broadcom announced the results after U.S. markets closed, but the stock surged 7.7%, or $9.25 a share, to $129.50, with most of that gain coming late in the session. In after-market trading, the price touched $140 a share.

The company also announced a 2-for-1 stock split that will be distributed on Feb. 17 to shareholders of record Feb. 5.

"Obviously, this company is just firing on all cylinders," said Jeff Lipton, an analyst with Hambrecht & Quist of San Francisco. "The overall industry is clearly doing very well, but this company is really been able to excel in the market."

The company recorded substantial increases in shipments of chips for digital set-top boxes to the home market, where high-speed Internet access through cable modems is finally taking off, said Henry T. Nicholas III, president and chief executive. Sales of chips for business networks also saw strong growth, he added.

"We're just at the knee of the curve of the conversion of the entire infrastructure," he said. "We're seeing accelerated demand from broadband in general, and an unquenchable thirst to get broadband into the home."

Cable modems have long been heralded as on the horizon, but now 30 million homes have high-speed Internet access, Nicholas said.

For the year, the company earned $36.4 million, or 78 cents a share, compared with a loss of $1.2 million, or 4 cents a share, in 1997. Revenue soared to $203.1 million from $37 million.

Since going public in April, the company has seen its stock trade as high as $191.25 and close as high as $179.25, although, like many other technology stocks, it had fallen back in recent weeks.

Nicholas said the company's pending deal to acquire Maverick Networks, a San Jose-based developer of switching equipment, will broaden its product line to include a low-cost method of transmitting voice and video over business networks.

The first product, a high-speed switch for business networks, will be introduced in the third quarter this year, he said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Broadcom Boom Continues

Broadcom earnings in the fourth quarter exceeded analysts' expectations and were more than five times higher than earnings a year ago. Sales and earnings in millions:

Sales

1997

4th qtr.: $17.3

1998

1st qtr.: $35.3

2nd qtr.: $45.2

3rd qtr.: $52.3

4th qtr.: $70.1

Earnings

1997

4th qtr.: $2.5

1998

1st qtr.: $7.7

2nd qtr.: $7.7

3rd qtr.: $8.2

4th qtr.: $12.8

****

On the Rebound

Broadcom's stock had sunk well below its closing high of $179.25 but bounced back, increasing more than $9 per share Tuesday. Weekly closing prices and Tuesday's close:

1998

April 17: $53.63

April 24: $52.50

May 1: $52.75

May 8: $59.00

May 15: $51.69

May 22: $56.00

May 29: $51.13

June 5: $56.25

June 12: $55.13

June 19: $54.13

June 26: $68.00

July 3: $76.50

July 10: $76.00

July 17: $75.38

July 24: $63.88

July 31: $62.75

Aug. 7: $61.25

Aug. 14: $65.50

Aug. 21: $67.19

Aug. 28: $59.13

Sept. 4: $60.00

Sept. 11: $69.00

Sept. 18: $75.00

Sept. 25: $80.00

Oct. 2: $66.63

Oct. 9: $62.13

Oct. 16: $72.50

Oct. 23: $75.50

Oct. 30: $82.94

Nov. 6: $86.50

Nov. 13: $87.13

Nov. 20: $87.81

Nov. 27: $96.25

Dec. 4: $93.13

Dec. 11: $108.00

Dec. 18: $112.00

Dec. 25: $120.50

1999

Jan. 1: $120.75

Jan. 8: $179.25

Jan. 15: $133.56

Jan. 22: $120.00

Tuesday close: $129.50

\o7 Source: Bloomberg News\f7

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