SANTA CLARA, Calif—Chip vendor Broadcom Corp. Tuesday (Jan. 31) reported fourth quarter results and gave first quarter guidance that beat analysts' expectations.
Broadcom (Irvine, Calif.) reported fourth quarter sales of $1.82 billion, down 7 percent from the previous quarter and down 6 percent from the year-ago quarter. The company reported a net income for the quarter of 254 million, or 47 cents per share, down 6 percent from the previous quarter and down 5 percent from the year-ago quarter.
On a pro forma basis, excluding charges, Broadcom reported a fourth quarter net income of $395 million, of 68 cents per diluted share, down from $488 million, or 83 cents per diluted share, in the fourth quarter of 2010.
Broadcom's fourth quarter results exceeded consensus analysts' expectations, which called for sales of $1.8 billion and a pro forma net income of 65 cents per share, according to Yahoo Finance.
For the full year 2011, Broadcom reported sales of 7.4 billion, up 8 percent from 2010. The company's net income for the year was 927 million, or $1.72 per share, down 14 percent from 2010.
Craig Berger, an analyst with FBR Capital Markets, said Tuesday's results demonstrate "another cycle of fundamental outperformance by most peers." While Broadcom's revenues declined sequentially, the reduction was due at least in part from the discontinuation of Broadcom's low-margin digital TV and Blu-ray chips and by declining revenue from legacy 2G chips, Berger said.
"Broadcom still sees strength in combo connectivity chips, though at the expense of discrete Bluetooth and Wi-Fi chips," Berger wrote in a report circulated Wednesday. "Competition here seems less fierce than feared a couple of months ago. Broadcom also had positive cellular commentary, with management seeing a large increase in design wins, many of which should ramp in 2H12 (on Android)."
Berger maintained his "outperform" rating on Broadcom's stock and raised his price target for the shares to $42 from $41. Broadcom traded at just over $37 in morning trading Wednesday.
Broadcom said it expects sales for the first quarter of this year to fall to between $1.7 billion and $1.8 billion. "Sequential revenue expectations for our broadband communications and mobile and wireless segments are expected to be down in Q1, while our infrastructure and networking sales are expected to be roughly flat," said Eric Brandt, Broadcom's chief financial officer and executive vice president.
Broadcom's guidance for the first quarter was in line with consensus analysts' expectations, which predicted first quarter sales of about $1.73 billion, according to Yahoo Finance.