Broadcom Earnings A Mixed Bag

Broadcom reported an increase in year-over-year revenue and profit; but fell in sequential income and its revenue will likely sink next quarter it said.

The specialty chip manufacturer from Irvine, Calif., announced its income for the fourth quarter was $266 million, or $0.47 per share. Its net income was down from $327 million, or $.60 per share in the third quarter but up from $59 million, or $.11 per share in the fourth quarter of 2009.

The company said excluding one-time costs such as non-recurring settlement and asset impairment charges, its earnings would have been $0.75 per share, which would have beaten analyst's expectations of $0.74 per share. Its $1.95 billion revenue represented a 7.7 percent increase from the third quarter and a 45 percent increase from the year-over quarter. However, Broadcom did say revenue would fall in the first quarter of 2011 in the range of $1.75 billion to $1.85 billion.

In after-market trading, Broadcom's stock fell more than five percent from $46.39 per share to $43.81 per share. It had closed at $46.39 per share, a nearly three percent increase from the beginning of the day.

Broadcom also reported its yearly earnings with its yearly net income showing impressive growth from $65 million, or $0.13 per share in 2009 to $1.08 billion, or $1.99 per share this year. Revenue was up 51.8 percent from $4.49 billion to $6.82 billion.

I am very pleased with our record performance in 2010, as Broadcom gained significant market share and delivered record revenue, earnings per share, and cash flow from operations, Broadcom president and chief executive Scott A. McGregor said in a statement.

Broadcom's chips are used in several Apple products and as a result, the company has had a tremendous year by all accounts.

In a separate release, Broadcom announced a 12.5 percent quarterly cash dividend increase and a $300 million accelerated share repurchase plan. McGregor said this was a show of dedication to its shareholders.

Broadcom's strong growth and powerful operating cash flow drive our ability to increase the return of capital to our investors while fueling our business organically and through mergers and acquisitions. A higher dividend, accelerated share repurchases and our evergreen share repurchase program reflects our continued commitment to returning capital to our shareholders, he said.

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