) reported adjusted earnings per share (excluding one-time items)
of 57 cents per share in the third quarter of 2012, beating the
Zacks Consensus Estimate by a penny.
On a reported basis, net income declined 18.5% year over year
to $220 million and earnings per share came in at 38 cents
compared with 48 cents in the year-ago quarter.
Broadcom generated revenues of $2.13 billion in the third
quarter of 2012, up 8.7% year over year and 8.0% sequentially,
and within management's projection of $2.0 billion - $2.15
In terms of end markets, Broadband Communications revenue was
up 2.6% sequentially, driven by growth in sales of set-top box
platforms based on solid secular trends and Broadcom
Mobile & Wireless segments were up 14% from the second
quarter to a record $1.02 billion, fueled by strong demand for
connectivity solutions. Broadcom, which competes with
), continues to benefit from increasing WiFi attach rates,
exponential growth in network traffic and strong adoption of
high-definition cable and satellite solutions in the emerging
In addition, 3G baseband business continues to grow with the
ramp up of the company's 40-nanometer platform. 3G baseband
business continues to witness sequential growth based on highly
integrated SoCs that cater to the growing global demand for
Smartphones continue to be growth drivers and management
continues to gain traction at T-Mobile and Samsung.
Revenue from Infrastructure & Networking segment grew 5.2%
sequentially, ahead of management's expectation, driven by
phenomenal growth in switching products. Ethernet switch, PHY and
multicore processors continue to gain traction. Broadcom recently
tied up with Hyundai, which will deploy Ethernet in advanced
driver assist systems, telematics and infotainment.
On a product basis, product revenue was up 9.2% year over year
to $2.0 billion. Income from the Qualcomm agreement came in at
$43 million, down from $52 million at the end of the year-ago
quarter. License revenues more than doubled to $7
Product gross margin came in at 52.1%, marginally down from
52.2% in the previous quarter but up from 50.9% in the year-ago
During the quarter, Broadcom generated $621 million in cash
from operations and used $65 million for capital expenditures.
The company paid dividends of $56 million in the quarter.
Accounts receivable days sales outstanding were 37 days in the
quarter, down from 38 days in the quarter. Inventory levels came
in at $557 million, up from $528 million in the
Broadcom ended the quarter with cash and equivalents of $1.4
billion, up from $1.3 billion at the end of the previous
For the fourth quarter of 2012, Broadcom projects revenues of
around $1.95 billion - $2.10 billion. Broadband segment is
expected to be roughly flat with the previous quarter as strength
in set-top box is being offset by the impending rollout of the
company's legacy Blu-ray and DTV businesses.
Infrastructure & Networking segment is expected to decline
on a sequential basis due to weakness in data center and
enterprise spending along with continued softness in service
provider capital expenditures.
Mobile & Wireless segment is also expected to decline due
to seasonality and better-than-expected sell-in as a result of
customer product launches during the third quarter.
Product gross margin is expected to be flat to slightly up on
a sequential basis.
Investors were indifferent to the results as shares were up
0.33% in after hours trading to close at $33.47.
We maintain a Neutral recommendation on Broadcom in the
long-run. However, we currently have a Zacks #4 Rank on the
stock, which translates to a short-term rating of Sell.
BROADCOM CORP-A (BRCM): Free Stock Analysis
QUALCOMM INC (QCOM): Free Stock Analysis
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