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Broadcom meets, warns
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April 18, 2001: 7:34 p.m. ET
Chipmaker meets lower profit estimates, sees continued weakness
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NEW YORK (CNNfn) - Communications chipmaker Broadcom Corp. on Wednesday reported a first-quarter profit that was in line with lowered expectations but said it expect continued market weakness to hurt its second quarter results.
The company, whose chips are used in high-speed communications equipment, said it earned $24.2 million, or 9 cents per share, in the first quarter, excluding merger-related and other one-time charges. During the same quarter last year, Broadcom reported an operating profit of $44.9 million, or 18 cents per share.
That was in line with the profit expectation of analysts polled by earnings tracker First Call, who revised their estimates down in early February after the company warned of slower growth, and then again in March.
Executives at Broadcom, which is based in Irvine, Calif., blamed the shortfall on cancelled orders from some of its key customers, including Cisco Systems, Motorola and 3Com.
Each of those companies, which together account for about 45 percent of Broadcom's sales, has issued its own revenue and earnings warnings and announced cost-cutting measures as they suffer from a slowdown in sales, particularly to U.S. based telecommunications service providers.
At $310.5 million, Broadcom's first-quarter revenue rose 62 percent from the $191.6 million it reported during the same period a year ago but was down 17 percent from the $376.1 million it reported in the fourth quarter of 2000.
Shares of Broadcom (BRCM: Research, Estimates) rose $4.61 to $34.01 on Nasdaq ahead of the earnings news, which was released after the closing bell. They edged up another 9 cents to $34.10 in extended-hours trade.
In a teleconference with analysts Wednesday evening, Broadcom executives said they expect the impact of the slowdown in orders to continue to weigh on the company's bottom line in the current quarter.
William Ruehle, Broadcom's chief financial officer, said the company expects revenues to fall in the second quarter as much as 23 percent from first-quarter levels, while its operating loss will range between 7 cents and 9 cents per share.
The most recent consensus estimate of analysts polled by First Call was for Broadcom to log sales of roughly $467.6 million -- suggesting a more than 50 percent sequential increase -- and an operating profit of 9 cents per share.
In an effort to cut costs, Broadcom Chief Executive Henry Nicholas said the company would enact a "material headcount reduction" in the second quarter, but would continue hiring in strategic areas.
-- from staff and wire reports 
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