Broadband Chipmaker Broadcom Making a Low-Speed Comeback - TheStreet

Broadcom (BRCM) is clawing its way back.

Once a Wall Street spark plug, the maker of integrated circuits for a wide range of products from cable set-top boxes to optical-networking equipment is struggling to get its revenue moving. Broadcom's business stalled in spring 2001, as chip revenues plummeted with the massive declines in such end markets as telecom, DSL, optics, broadband equipment and wireless equipment.

Reporting on the fourth quarter of 2001 after the market's close Wednesday, Broadcom showed it is inching back, posting its second consecutive quarterly uptick since a ruinous second quarter in which revenue dove 34% sequentially and earnings evaporated. In its fourth quarter, the component maker amassed $226.8 million in revenue, a 6% sequential improvement, and posted a $1.27 per-share loss.

Excluding charges for a handful of items including restructuring costs, payroll taxes and investment losses, Broadcom managed an 11-cents-a-share loss to edge out Wall Street estimates of a 12-cents-a-share pro forma loss on $221 million in revenue, as tabulated by Multex.com.

Broadcom shares jumped 4% to $45.38 in Wednesday trading.

The fourth-quarter's $330 million net loss pales next to the third quarter's $1.6 billion net shortfall. In the third quarter, Broadcom took a drastic writedown to jettison $1.23 billion in goodwill related to acquisitions made at the height of market values.

Broadcom management outlined further improvement in the first and second quarters of 2002. CFO Bill Ruehle predicted a 3% to 4% revenue increase in the first quarter under way to a range of $234 to $236 million, with a 10-cents-a-share loss. The technology provider anticipates mid-single-digit revenue growth in the second quarter.

"Visibility is improving slightly, probably back to where it was pre-Sept. 11," Ruehle said. "The first half of 2002 gives us increased confidence that the worst is behind us and that we're getting back on a growth track."

Broadcom worked its gain in revenue to a 1.9% sequential enhancement of its gross margins to 49%. The company expects gross margins to improve to 50% in the first quarter of 2002.

Motorola

(MOT)

continued to be Broadcom's leading customer during the fourth quarter, but its share of the company's business dropped from 22% to 18%.

Cisco

(CSCO) - Get Report

nudged over the 10% mark, a gain Ruehle applauded, saying Cisco hadn't captured that high a portion of Broadcom's revenue since the fourth quarter of 2000.

"We're glad to have them back," he said.