By Chris Bulkey, principal analyst at Technology Research Group

Broadcom ( BRCM) reported first-quarter pro forma earnings of 57 cents a share which falls to 40 cents a share on a GAAP basis.

Revenue in the quarter was $1.46 billion.

Technology Research Group's estimates were earnings of 47 cents a share on revenue of $1.38 billion.

Growth rates and upside from expectations are meaningless given a lack of quality on both the top and bottom lines.

Nearly 4% of sales came from a finite source -- a settlement with Qualcomm ( QCOM) that has a four-year life.

Signs of backlog reduction and irregular gross margin progression cast further doubt on revenue quality. Deferrals were reduced by nearly $10 million quarter to quarter, while gross margin fell 60 basis points to 52.5% amid a 9% quarter-to-quarter revenue upturn.

Growth of 71% year to year isn't entirely organic. Broadcom has acquired more than three dozen companies since inception, and several were completed withinthe past two years. Goodwill is far from inconsequential as a result (30% of totalassets).

More than $190 million of long-lived assets were impaired in 2008 and 2009;restructuring charges also surfaced during this time, though to a much lesser extent. The former lowered expense levels, while the latter provides flexibility to smooth margins in any given quarter.

Adding to restructuring accruals in this latest quarter, albeit by asmall amount of $430,000, suggests that cost drivers have not yet stabilized.Normalizing research and development expenses, net utilization of restructuring reserves, and NOL usage would shave nearly 5 cents from the bottom line.

We reiterate a sell rating and $31 price target, assuming a multiple of 25times the 2010 per-share earnings estimate.