Leading semiconductor manufacturer
) reported GAAP net income of $168 million or 29 cents per share
in fourth quarter 2013 versus $251 million or 43 cents in the
year-ago quarter. The year-over-year decrease in earnings was
primarily attributable to lower revenues and high operating
BROADCOM CORP-A (BRCM): Free Stock Analysis
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Non-GAAP net income stood at $366 million or 60 cents per share
in the reported quarter compared with $462 million or 76 cents
per share in the year-earlier quarter. Despite the year-over-year
decrease, adjusted earnings comprehensively beat the Zacks
Consensus Estimate of 38 cents.
For full year 2013, GAAP net income was $424 million or 73 cents
per share compared with $719 million or $1.25 in the prior year.
Non-GAAP net income for 2013 was $1.7 billion or $2.72 per share
compared with $1.8 billion or $2.92 per share in the year-ago
period. Adjusted earnings for full year 2013 were well ahead of
the Zacks Consensus Estimate of $1.84.
Revenues for fourth quarter 2013 were $2,064 million, down 0.8%
year over year and above the Zacks Consensus Estimate of $2,028
million. For full year 2013, Broadcom reported revenues of $8,305
million, significantly up from $8,006 million in the previous
In terms of end markets, Broadband Communications revenues
declined 3% on a sequential basis to $548 million. Mobile &
Wireless segment revenues decreased 7% sequentially to $940
million. Revenues from Infrastructure & Networking segment
were up 2% on a sequential basis to $576 million, driven by
higher sales of Ethernet switches and physical layer devices
GAAP product margin for the reported quarter improved to 50.3%
from 49.7% in the prior-year quarter. Non-GAAP product gross
margin was up marginally to 52.6%.
In order to streamline its costs and better align its resources
as per strategic priorities, Broadcom initiated a global
restructuring plan during the reported quarter. This includes
retrenchment of up to 1,150 employees. Broadcom recorded
restructuring costs of $17 million in the fourth quarter of 2013
in accordance with the plan and anticipates recording
approximately $5 million in the next quarter.
Balance Sheet/Cash Flow
Broadcom generated $1,785 million in cash from operations in 2013
compared with $1,931 million in the previous year. The company
ended the year with cash and cash equivalents of $1,657 million,
down from $1,617 million at year-end 2012. Long-term debt at
year-end 2013 remained flat year over year at $1.4 billion.
Concurrent with the earnings release, management provided its
guidance for first quarter 2014. Total revenue is expected to be
within $1.9 billion and $2.0 billion. Product gross margin on a
GAAP basis is expected to be down 100 basis points to 150 basis
points sequentially in the first quarter of 2014. Research &
development and selling, general, and administrative expenses
(GAAP) are expected to be up $20 million to $40 million
Broadcom expects a steady momentum in broadband in the coming
quarters, driven by emerging market penetration and new
technology adoption in developed markets. The company intends to
deliver healthy LTE (Long Term Evolution) revenues in 2014, while
focusing on data center innovation and next generation home video
products with HEVC (High Efficiency Video Coding).
Broadcom presently has a Zacks Rank #1 (Strong Buy). Other
notable companies in the sector that are worth mentioning include
Montage Technology Group Limited
NXP Semiconductors NV
ON Semiconductor Corp.
), each carrying a Zacks Rank #2 (Buy).