A More Cautious Broadcom (BRCM)

Broadcom Corp. (NASDAQ: BRCM) has posted earnings, which may not be shocking if you have read the reports from its peers.  There was a net loss of -$0.32 on items including impairments, but we are focusing on the non-GAAP earnings like most analysts who cover the stock.  The communications chip provider said items affected earnings by $0.40 EPS, so we would assign a face value non-GAAP EPS at $0.08.  It did show a 13% drop in revenues to $1.127 billion.  First Call had estimates at $0.27 EPS and $1.07 billion in revenues. 

The company did not give any formal guidance.  Estimates from FirstCall for next quarter are $0.17 EPS and $953.14 million in revenue. 

It talked about the problems in its sector and said,"we believe the current economic slowdown will continue to negativelyimpact our business as demand continues to decrease and settle into newlevels and channel inventory adjusts accordingly."

The company is re-stating from its December analyst day that it wantsto manage costs and focus on free cash flows in 2009, yet managingresearch expenses and market share gains. The company said it is delaying salaryincreases, reducing its workforce, and cutting discretionaryspending.

Shares closed down almost 5% at $17.43 in regular trading, and the stock’s initial after-hours reaction has shares down between 1% and 2% for now.

If you have looked through what peers like Qualcomm, Marvell, TexasInstruments, and others chip players have said, there is really nothingsurprising in here other than its lack of formality over its non-GAAPEPS numbers.

Jon C. Ogg
January 29, 2009