Henry Nicholas, CEO of Broadcom ( BRCM), was his typical outspoken self when answering beaten-down investors' questions at the JPMorgan H&Q Tech Conference. "You're all to blame, dammit," teased Nicholas. Fast and furious, Nicholas went through expectations of his upcoming quarters, explaining that year-over-year comparisons aren't going to look good because of stellar third and fourth quarters of 2000 that came from "selling to companies that never should have existed." Investors laughed through the pain as Nicholas quickly sketched out the scenario that saw the red-hot networking sector turn ice cold. All those start-ups with their $100 million in year 2000 funding bought their Cisco ( CSCO) equipment, "used it for 10 minutes and are now reselling it for 50 cents on the dollar in the market. They're spending your money." Stop, you're killing me! Nicholas reiterated that revenue and profit will decline quarter over quarter because of "general weakness in the U.S. economy." Broadcom is still suffering as its customers work through inventory and delay their orders. Nicholas says he thinks demand could restart at the end of this year.
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Nicholas didn't shock the audience with his brash remarks, but he did surprise JPMorgan H&Q analyst Eric Chen when he said that Broadcom sees no inventory issue in the set-top box market. "We're seeing a nice dynamic there," Nicholas said. Apparently Chen had a different impression of set-top demand. Additionally, Nicholas answered questions about Broadcom's relationship with Cisco, which has said it wants to improve relationships with certain component suppliers. Nicholas knew of no major strains between his company and Cisco, aside from the delayed StrataSwitch. He said in contrast to his competitors, he didn't gouge Cisco or ask the giant to sign up for lengthy lead times on orders last year when components were tight. "Component vendors were taking advantage," alleges Nicholas, during the "tightest semiconductor market in history." Nicholas is way too nice to pull something like that.