Broadcom Beats Expectations - Analyst Blog

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Broadcom Corporation  ( BRCM ) generated revenues of $1.82 billion in the fourth quarter of 2011, down 6.4% year over year and down 7.0% sequentially, but which surpassed Zacks Consensus Estimate of $1.79 billion and management's projection of $1.8 billion.

In terms of end-markets, the Broadband Communications revenue was down 3% sequentially due to decease in demand for DTV and Blu-ray products.

The Infrastructure & Networking business was down 13% sequentially due to softness in Ethernet Switches and PHYs, particularly in the enterprise and service provider segments

The Mobile and Wireless business was down 7% sequentially as growth in 3G baseband and continued strong market share in wireless connectivity combo chips was more than offset by softness in 2G baseband and multimedia solutions.

On a product basis, product revenue declined to $1.9 billion from $1.9 billion. Income from the Qualcomm agreement was flat at 51.7 million. License revenues were flat at $4.0 million. 

Margins : Product gross margin came in at 50.6%, up from 50.4% in the previous quarter. Net income came in at $254 million or $0.45 per diluted share compared to a net income of $266 million or $0.47 per diluted share in the year-ago quarter and a net income of $270 million or $0.48 per share in the previous quarter. The net income per share came reported in the quarter missed the Zacks Consensus Estimate of $0.40.

For 2011, revenues came in $7.39, up 8.4% from a year ago. Net income came in at $927 million or $1.65 per share compared to a net income of $1.08 billion or $0.32 per share in 2010.

Balance Sheet : During the quarter, Broadcom generated $482 million in cash from operations and used $22.0 million for capital expenditures. The company did not repurchase any shares in the quarter. Accounts receivable days sales outstanding were 34 days in the quarter, compared to 38 days in the previous quarter. Inventory levels decreased $70 million from the previous quarter.

Broadcom ended the quarter with cash and equivalents of $4.2 billion, up from $2.4 billion at the end of third quarter. Broadcom benefited from strong operating cash flows, a successful debt offering of $500 million and roughly $200 million in net option proceeds.

For 2011, Broadcom repurchased 17 million shares of our stock. Broadcom returned $860 million in capital to shareholders in the quarter as dividends and share repurchases.

Guidance : For the second quarter of 2012, Broadcom projects revenues around $1.7 billion - $1.8 billion. Management expects revenues from Broadband Communications and Mobile & Wireless segments are expected to be down all segments to be down. Infrastructure and Networking sales are expected to be roughly flat. Product gross margin is expected to be flat. Product gross margin is projected to be flat sequentially.

Broadcom continues to benefit from powerful trends in the communications market driven by phenomenal growth of smartphones around the globe. Management expects 5G Wi-Fi coming to market opening up a wide array of opportunities.

The results led to a 1.89% increase in stock price in after-market hours trading to close at $35.00.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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