Broadcom Corp, the largest maker of chips for cable modems, had a US$436.4 million loss in the second quarter on acquisition-related expenses and a 14 percent decline in revenue. Third-quarter sales will be little changed from the previous period, Broadcom said.
The loss was US$1.73 a share, compared with net income of US$55.9 million, or US$0.22 a share, the company said in a statement. Revenue dropped to US$210.9 million from US$245.2 million.
Broadcom faces a possible loss and lower revenue this year as customers such as Cisco Systems Inc deplete their inventory and demand for telecommunications equipment falls. Business still may pick up, partly on demand for new chips for cable television set-top boxes, Chief Executive Henry Nicholas said. Broadcom shares rose as much as 8.3 percent in after-hours trading.
"There's still going to be risk for the next two quarters," said Venu Reddy, an analyst at Waddell & Reed Financial Inc, which sold most of its Broadcom stake last quarter. "This is a bad environment. They don't know anything [about] what the macro-economy is going to do."
Irvine, California-based Broadcom, which last year reached US$1 billion in annual sales faster than any US chipmaker, also makes semiconductors for computer-network switches and digital cable-TV set-top boxes.
Broadcom shares fell US$3.27 to US$39 and rose as high as US$41.30 in after-hours trading following the report. They had declined 54 percent this year.
Excluding charges, acquisition-related costs and other items, Broadcom's loss was US$0.16 a share, in line with a reduced forecast. On that basis, the numbers aren't in accordance with generally accepted accounting principles.
On a conference call today, chief financial officer William Ruehle said third-quarter revenue will be "approximately flat" compared with the second quarter. Operating expenses will be "down slightly," resulting in a loss, before charges and acquisition expenses, that's "equal to or slightly better than" the second quarter's US$0.16 a share, Ruehle said.
Revenue may begin to rebound by year-end, Ruehle said, though he declined to offer a specific financial prediction for the fourth quarter.
Waddell's Reddy said he's also skeptical of the third-quarter target because Broadcom doesn't "have any visibility" into its networking-chip business, which he estimated at 40 percent of revenue, and because Motorola Inc, Broadcom's top customer, expects third-quarter sales of cable set-top boxes using Broadcom chips to decline.
A brokerage analyst, WR Hambrecht & Co's Jim Liang, said he upgraded Broadcom shares to a "buy" from "neutral" last week on the assumption that sales will begin to recover in the fourth quarter. He also upgraded rival Vitesse Semiconductor Corp and chipmaker Altera Corp to "strong buy" from "buy." He said he believes sales will rebound because chip inventories have mostly been depleted and the US economy will begin to recover in the fourth quarter.
Ruehle said on the call that the company will "generate operating profit" when quarterly revenue exceeds US$300 million. In an interview, he elaborated: Broadcom is willing to take the risk of losing money in hope that spending on product development will pay off with higher sales later, Ruehle said.
Motorola, the biggest maker of cable modems and digital cable set-top boxes, was the largest customer, accounting for 14 percent of sales, Ruehle said. That's down from 18.6 percent in the first quarter.
On June 6, Nicholas said second-quarter revenue would fall 32 percent to 35 percent from the first quarter's US$318.1 million, implying a range of US$207 million to US$216 million. In April, he forecast a decline of 20 percent to 23 percent.
Analysts polled by First Call/Thomson Financial forecast a third-quarter loss, on average, of US$0.14 a share. Estimates ranged from a loss of US$0.09 to US$0.20 a share.
Broadcom eliminated more than 200 jobs during the quarter to "remove redundancies throughout the company," Nicholas said in a statement. That's more than 7.2 percent of the workforce of 2,797 as of March 31. Nicholas previously said Broadcom would cut jobs, though he hadn't disclosed how many.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique