4/18/2003 - Broadcom Corporation (Nasdaq: BRCM), the leading provider of silicon solutions enabling broadband communications, reported financial results for its first fiscal quarter ended March 31, 2003.
Net revenue for the first quarter of 2003 was $327.5 million, an increase of 10.7% from the $295.9 million reported for the fourth quarter of 2002 and an increase of 37.1% from the $238.8 million reported for the first quarter of 2002. Net loss computed in accordance with generally accepted accounting principles (GAAP) for the first quarter of 2003 was $67.9 million, or $.25 per share (basic and diluted), compared with a GAAP net loss of $1,758 million, or $6.40 per share (basic and diluted), for the fourth quarter of 2002, and a GAAP net loss of $166.1 million, or $.63 per share (basic and diluted), for the first quarter of 2002.
Broadcom reports net income (loss) and basic and diluted net income (loss) per share in accordance with GAAP and additionally on a non-GAAP basis, referred to as pro forma, which excludes the effects of stock-based compensation, certain other acquisition-related expenses, employer payroll tax expense on certain stock option exercises, certain non-recurring and other charges, such as impairment of goodwill and other intangible assets, restructuring costs, gain or loss on strategic investments, non-operating gains, valuation allowance on deferred tax assets and other related income tax effects.
After excluding these charges, gains and effects included in GAAP reporting, pro forma net income for the first quarter of 2003 was $17.0 million, or $.06 per share (diluted). This compares with pro forma net loss of $6.6 million, or $.02 per share (basic and diluted), for the fourth quarter of 2002, and pro forma net loss of $21.9 million, or $.08 per share (basic and diluted), for the first quarter of 2002. Substantially all of the charges, gains and effects excluded from pro forma reporting were non-cash. As in prior periods, a reconciliation of GAAP net loss to pro forma net income (loss) appears in the financial statements portion of this release.
GAAP net loss per share for the first quarter of 2003 was based on 276.3 million weighted average shares outstanding (basic and diluted). Pro forma net income per share for the first quarter of 2003 was based upon 289.0 million weighted average shares outstanding (diluted). Both GAAP net loss per share and pro forma net loss per share were based on 274.5 million weighted average shares outstanding (basic and diluted) for the fourth quarter of 2002 and 262.0 million weighted average shares outstanding (basic and diluted) for the first quarter of 2002.
Broadcom believes pro forma reporting is a more accurate representation of the company’s on-going economic performance and therefore uses pro forma reporting internally to evaluate and manage the company’s operations. Broadcom has chosen to provide this information to investors to enable them to perform more meaningful comparisons of operating results and as a means to emphasize the results of on-going operations.
“This earnings report represents an important event for Broadcom, as we return to pro forma profitability and complete our seventh consecutive quarter of revenue growth during a challenging time for the technology industry,” said Alan E. “Lanny” Ross, Broadcom’s President and CEO. “Our performance continues to be led by strength in our emerging markets, as well as growth in our broadband modem and PC client product lines.”
“Our accomplishments during the quarter validate the central underpinnings of our business approach as we focus on continued innovation and execution in the design, integration, and delivery of broadband silicon solutions to our customers,” Mr. Ross said. “Operationally, we have taken steps to enhance our ability to scale the company for future revenue growth.”
Following is a review of selected key accomplishments and progress during the first quarter in the principal markets served by Broadcom:
In wireless markets, Broadcom began equipping Dell’s Latitude® D-Family of notebook computers with advanced connectivity through an integrated communications platform – supplying 54gTM wireless LAN chipsets, Gigabit Ethernet controllers and modem devices. This development was important for several reasons, including the fact that it showcased Broadcom’s integration strategy, successfully combining technology from the company’s core and new product markets, in particular leveraging its 54gTM wireless LAN expertise. Further solidifying its wireless LAN position in the mobile computing market, Broadcom announced adoption of its 54gTM wireless technology by HP in its new Presario 2100 and 2500 series notebooks. During the quarter, Broadcom passed the 3 million mark for 54gTM wireless LAN silicon chips (representing more than 1.3 million chipsets) shipped in the first three months of production. This milestone highlighted Broadcom’s success in maintaining its execution edge and in responding aggressively and effectively to an emerging market.
In mobile communications, Pantech & Curitel Inc. of Korea launched two new GSM handsets using Broadcom’s cellular phone platform technology and selected Broadcom’s GPRS technology for a series of new handsets. Broadcom also entered into a strategic partnership with Ningbo Bird, the largest local supplier of cellular phone handsets in China, encompassing the development of multimedia GSM/GPRS handsets for sales into the significant market in China and abroad.
In the market for delivery of broadband communications to the home, Broadcom’s family of digital home video products provides the underlying HDTV technology of EchoStar’s “Best of Show” DishPVR 921 satellite TV receiver, shown at the Consumer Electronics Show in Las Vegas. The DishPVR 921 is the first satellite TV home entertainment system to offer consumers high definition personal video recording (PVR) capabilities.
Additionally in the home market, Sumitomo Electric Networks introduced ADSL Customer Premises Equipment (CPE) based on Broadcom’s BCM6345 single-chip, high-performance DSL CPE router solution, and Broadcom announced that Ericsson had developed DSL central office equipment based on Broadcom’s BladeRunnerTM chipset.
In markets for enterprise networking, Broadcom’s ServerWorks subsidiary entered the storage controller market via its Serial Advanced Technology Attachment (SATA) host controllers. Unlike the ServerWorksTM Grand ChampionTM product line that operates only with Intel-based servers, these new SATA members of the System I/OTM product family can be used in any computer system that includes PCI or PCI-X bus technologies, thus expanding the markets that ServerWorks can address. Supporting further diversification, Stratus Technologies noted its support of ServerWorks’ I/O server technology for storage and enterprise switching applications.
Furthering its expertise in storage area networking (SAN), during the quarter Broadcom acquired a substantial portion of the assets of Gadzoox Networks, Inc., a leading provider of fibre channel storage networking technology. With the addition of Gadzoox technology to its product portfolio, Broadcom now has a complete suite of networking products for the storage industry, including multi-port Gigabit Fibre Channel SerDes, Gigabit Ethernet and iSCSI controllers, ServerWorks Serial ATA controllers and I/O bridges, multi-protocol Gigabit switch fabrics, and SiByteTM broadband network processors.
In operations, Broadcom achieved a number of major product volume milestones, a testament to the company’s supply chain management and ability to scale. In addition to Broadcom’s shipping more than 1.3 million 54gTM chip sets, ServerWorks passed the 10 million mark in core logic chip sets shipped to leading OEMS including Dell, EMC, Fujitsu Siemens, HP, IBM, Microsoft, NEC, and Network Appliance, Inc. Additionally, Broadcom shipped its 10 millionth Gigabit Ethernet over Copper port, facilitating the continued upgrading of Fast Ethernet broadband networks. With five generations of this technology delivered to market, Broadcom has the industry’s most widely used Gigabit Ethernet copper physical layer devices and almost 200 publicly announced design wins, as well as the broadest customer penetration with selection by nearly every leading networking OEM worldwide.
“In summary, our investments in diversification over the past three years have helped us grow during these challenging economic times,” Mr. Ross said. “We believe we have a solid foundation in place to deliver profitable growth and take advantage of the significant operating leverage that exists in our business.”
Broadcom will conduct a conference call with analysts and investors to discuss its first quarter 2003 financial results and current financial prospects today at 4:45 p.m. Eastern Time (1:45 p.m. Pacific Time). The company will broadcast the conference over the Internet. To listen to the call and to access additional financial information that will be discussed on the call, please visit the Investor Information section of the Broadcom Website at www.broadcom.com/investor. The Webcast will be recorded and available for replay through the same link.
Broadcom Corporation is the leading provider of highly integrated silicon solutions that enable broadband communications and networking of voice, video and data services. Using proprietary technologies and advanced design methodologies, Broadcom designs, develops and supplies complete system-on-a-chip solutions and related hardware and software applications for every major broadband communications market. Our diverse product portfolio includes solutions for digital cable and satellite set-top boxes; cable and DSL modems and residential gateways; high-speed transmission and switching for local, metropolitan, wide area and storage networking; home and wireless networking; cellular and terrestrial wireless communications; Voice over Internet Protocol (VoIP) gateway and telephony systems; broadband network processors; and SystemI/OTM server solutions. These technologies and products support our core mission: Connecting everything®.
Broadcom is headquartered in Irvine, Calif., and may be contacted at 1-949-450-8700 or at www.broadcom.com.
Broadcom®, the pulse logo, Connecting everything®, 54gTM, ServerWorksTM, Grand ChampionTM, SiByteTM and SystemI/OTM are trademarks of Broadcom Corporation and/or its affiliates in the United States and certain other countries. Latitude® is a trademark of Dell Computer Corporation. Intel® is a trademark of Intel Corporation.
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