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Broadcom Posts Loss; Revenue Drops 33%

January 24, 2002|JAMES S. GRANELLI | TIMES STAFF WRITER

Communications chip maker Broadcom Corp., saying Wednesday that the worst is over for the company in the yearlong industry slump, reported a sharp reduction in its fourth-quarter loss, even though sales dropped 33%.

The Irvine-based company lost $329.6 million, or $1.27 a share, in the quarter, compared with a loss of $768.3 million, or $3.28 a share, a year earlier. Sales fell to $226.8 million from $340.2 million.

But the company's news, released after the market closed, did not cheer Wall Street. The stock gained $1.83 to close at $45.38 a share on Nasdaq, but lost as much as $3.98 in after-hours trading.

In an industry that suffered its worst year in 2001 with sales falling more than 30%, analysts and money managers are looking mainly at revenue growth from one quarter to the next, and Broadcom didn't quite measure up, said analyst Kalpesh Kapadia at C.E. Unterberg, Towbin in San Francisco.

Wall Street had expected sales of $225 million to $230 million, and Broadcom came in at the lower end. Executives said they expect sales in the first three months to be up 3% to 4% over fourth-quarter sales, but that also would be a few million dollars below what analysts are anticipating, he said.

Fourth-quarter sales did grow 6% from $213.6 million in the third quarter, when the company lost $1.6 billion, or $6.36 a share.

Broadcom is banking on new products and increased sales of current products to reach profitability, excluding special charges, by late this year. Among those products are new chip sets for wireless local area networks. The company's chief executive, Henry T. Nicholas III, said he expects these LAN chips to be a major driver in the company's growth this year.

For the year, Broadcom lost $2.7 billion, or $10.79 a share, compared with the previous year's loss of $687.8 million, or $3.13 a share. Sales fell nearly 13% to $961.8 million.

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In other technology earnings reported Wednesday:

* QLogic Corp., Aliso Viejo supplier of computer storage area networking equipment, earned $17 million, or 18 cents a share, for its fiscal third quarter, down 33% from last year's third-quarter profit of $25.2 million, or 26 cents a share. Sales fell 14% to $83.6 million. Though revenue dropped year-to-year, sales grew 2% from the second quarter, giving analysts hope of an upswing.

* Activision Inc., the Santa Monica video-game publisher, said its fiscal third-quarter profit surged 91% due to a strong holiday season. The company posted a profit of $39.1 million, or 66 cents a share, up from $20.5 million, or 45 cents a share. That beat a First Call estimate of 58 cents. Sales in the period ended Dec. 31 rose 40%, to $371 million, from $264.5 million a year earlier.

The company also raised its financial estimates for the year ending March 31, saying it probably will post $765 million in revenue, up from previous guidance of $725million. The company's shares hit $27 in after-hours trading. It closed at $24.80 in regular Nasdaq trading. The results were announced after the market closed.

* BCE Inc., Canada's biggest telecommunications company, said its fourth-quarter loss widened as operating costs rose almost three times as fast as sales. The Montreal-based company's loss was $194.2 million, compared with a loss from continuing operations of $4.4 million a year earlier. BCE said it spent $248 million, mostly to cut jobs at its Bell Canada and Aliant phone units and to write down its analog cell-phone and paging networks. BCE also spent more to attract new customers for wireless and other services, pushing operating expenses up 23% to $2.41 billion.

* Corning Inc., the biggest maker of optical fiber, said its fourth-quarter loss widened dramatically on expenses for job cuts and inventory write-downs and a 53% plunge in sales. The loss grew to $655 million, or 69 cents a share, from $58 million, or 6 cents, in the year-earlier quarter. Sales fell to $974 million from $2.08 billion. Excluding $799 million in pretax expenses, acquisition costs and other items, Corning said it would have had a loss of $261 million, or 28 cents a share.

* EarthLink Inc., the third-biggest U.S. Internet service provider, said its first-quarter loss excluding some costs will be wider than expected. Excluding acquisition-related costs, Atlanta-based EarthLink said the loss will be 10 cents to 13 cents a share on sales of $340million. It was expected to lose 8 cents a share on sales of $347.8 million. EarthLink plans to increase its marketing spending by 10% to 20% this year to attract customers to its regular and high-speed Internet access. EarthLink said that it lost 103,000 dial-up customers from a year ago, and that it would sign up as many as 300,000 high-speed Internet customers this year, less than forecast.

* LSI Logic Corp., the biggest maker of custom semiconductors, said it had a fourth-quarter loss on falling chip sales and restructuring and acquisition costs. The loss was $250.1 million, or 68 cents a share, compared with net income of $61.7million, or 18 cents, a year earlier, the Milpitas, Calif., company said. Sales fell 46% to $405.8 million from $750.6 million. LSI said it expects first-quarter sales of break even to 3% above the fourth quarter.

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