Broadcom Reports Third Quarter 2010 Results

IRVINE, Calif., Oct. 26 /PRNewswire-FirstCall/ --

Q3 Summary

• Revenue: $1.806 billion (up 44% year over year)
• Gross Margin: 51.7% (Product Gross Margin: 50.1%)
• Operating Margin: 18.5%
• Net Income: $327 million
• Earnings per Share:  $0.60 (up 275% year over year)
• Cash Flow from Operations: $456 million

Broadcom Corporation (Nasdaq: BRCM) today reported unaudited financial results for its third quarter ended September 30, 2010.

Net revenue for the third quarter of 2010 was a record $1.806 billion. This represents an increase in net revenue of 12.6% compared with the $1.604 billion reported for the second quarter of 2010 and an increase of 44% compared with the $1.254 billion reported for the third quarter of 2009. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the third quarter of 2010 was $327 million, or $.60 per share (diluted), compared with GAAP net income of $278 million, or $.52 per share (diluted), for the second quarter of 2010, and GAAP net income of $85 million, or $.16 per share (diluted), for the third quarter of 2009.

Net revenue for the nine months ended September 30, 2010 was $4.873 billion. This represents an increase in net revenue of 54.8% from the $3.148 billion reported for the nine months ended September 30, 2009. Net income computed in accordance with GAAP for the nine months ended September 30, 2010 was $816 million, or $1.52 per share (diluted), compared with GAAP net income of $6 million, or $.01 per share (diluted), for the nine months ended September 30, 2009.

For a discussion of certain selected transactions and their related accounting impact for all periods presented, see the "Unaudited Supplementary Financial Data" schedule below.

"Broadcom continues to execute exceptionally well with record revenue and earnings in the third quarter of 2010. I am particularly pleased that we had record sales in each of our segments and reached our GAAP product operating margin model of 15% - 17%. These achievements are due to solid growth in our wired and wireless communication businesses, powerfully engineered products and Broadcom's continued commitment to financial discipline," said Scott A. McGregor, Broadcom's President and Chief Executive Officer.

"Looking ahead, we believe that consumer demand for connectivity will continue to drive demand for our communication semiconductors, which should enable Broadcom to deliver solid revenue growth and sustained profitability in the fourth quarter."

Conference Call Information

As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its third quarter 2010 financial results and current financial prospects today at 1:45 p.m. Pacific Time (4:45 p.m. Eastern Time).  The company will broadcast the conference call via webcast over the Internet.  To listen to the webcast, or to view the financial and other statistical information required by Securities and Exchange Commission (SEC) Regulation G, please visit the Investors section of the Broadcom website at www.broadcom.com/investors.  The webcast will be recorded and available for replay until 5:00 p.m. Pacific Time, November 23, 2010.

The financial results included in this release are unaudited.

About Broadcom

Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications.  Broadcom® products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment.  We provide the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices.  These solutions support our core mission: Connecting everything®.

Broadcom, one of the world's largest fabless communications semiconductor companies, with 2009 revenue of $4.49 billion, holds more than 4,500 U.S. and 1,900 foreign patents, and has more than 7,800 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.

A FORTUNE 500® company, Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe.  Broadcom may be contacted at +1.949.926.5000 or at www.broadcom.com.

Cautions regarding Forward-Looking Statements:

All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to, guidance provided on future revenue, gross product margin and operating expense targets for the fourth quarter of 2010, references to the positioning of our products and statements about opportunities within the wired and wireless communication markets and the continuing demand for connectivity and communication semiconductors. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

These risks and uncertainties include, but are not limited to the following:

• Our operating results may be adversely impacted by worldwide economic uncertainties and specific conditions in the markets we address.
• Our quarterly operating results may fluctuate significantly.
• Our stock price is highly volatile.
• We face intense competition.
• We depend on a few significant customers for a substantial portion of our revenue.
• We may fail to adjust our operations in response to changes in demand.
• We face risks associated with our acquisition strategy.
• We may be required to defend against alleged infringement of intellectual property rights.
• We may not be able to protect or enforce our intellectual property rights.
• Our business is subject to potential tax liabilities.
• We are involved in litigation.
• We manufacture and sell complex products and may be unable to successfully develop and introduce new products.
• We are subject to order and shipment uncertainties.
• We are increasingly exposed to risks associated with our international operations.
• We depend on third-party subcontractors to fabricate, assemble and test our products.
• Government regulation may adversely affect our business.
• We may be unable to attract, retain or motivate key personnel.
• Our co-founders and their affiliates may control the outcome of matters that require the approval of our shareholders.
• There can be no assurance that we will continue to declare cash dividends.
• Our articles of incorporation and bylaws contain anti-takeover provisions.

Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release and the related conference call for analysts and investors speak only as of the date they are made.  We undertake no obligation to revise or update publicly any forward-looking statement, except as required by law.

Broadcom®, the pulse logo, Connecting everything®, and the Connecting everything logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU.  Any other trademarks or trade names mentioned are the property of their respective owners.

Certain prior period amounts in the unaudited condensed consolidated statements of income have been reclassified to conform with the current period presentation of income from the Qualcomm Agreement and licensing revenue.

The following table presents details of total stock-based compensation expense included in each functional line item in the unaudited condensed consolidated statements of income above:

Broadcom has based the preceding guidance for the three months ending December 31, 2010 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of October 26, 2010. Our guidance consists of predictions only, however, and is subject to a wide range of known and unknown business risks and uncertainties, many of which are beyond our control. The forecasts and projections contained in the table above should not be regarded as representations by Broadcom that the estimated results will be achieved. Projections and estimates are necessarily speculative in nature and actual results may vary materially from the guidance we provide today.

The guidance set forth in the above table should be read together with the information under the caption, "Cautions regarding Forward-Looking Statements" above, our Annual Report on Form 10-K for the year ended December 31, 2009, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, except as required by law.

SOURCE Broadcom Corporation; BRCM Corporate