Tuesday, February 1, 2011

Broadcom Corp. (NASDAQ: BRCM): Q4 Earnings Preview 2010

Broadcom Corp. (NASDAQ: BRCM) is scheduled to release its fourth-quarter financial results after the closing bell on Tuesday, February 1, 2011. Analysts, on average, expect the company to report earnings of 74 cents per share on revenue of $1.90 billion. In the year ago quarter, the company reported earnings of 49 cents per share on revenue of $1.34 billion.

Broadcom ships nearly a billion chips a year for use in devices all up and down the digital food chain, from the tiny radio in a Bluetooth earpiece to the processors that enable the Internet's largest data servers to communicate.  Broadcom is the leading supplier for 11 of the 18 types of chips it makes, including those that go into Blu-ray players and cable modems. The company designs chips for for many of the world's bestselling consumer devices: Android phones and Wiis, iPhones and iPads, to name a few. 

Broadcom has grown by acquiring smaller firms that develop complementary technologies in network communications. In the last decade, it has bought 43 companies, many of them in Europe, Asia and the Middle East.

In the preceding third quarter, the Irvine, California-based company's net income was $327 million, or 60 cents a share, compared to $85 million, or 16 cents a share, in the year-earlier quarter. Revenue surged 44% to $1.8 billion. Analysts, on average, expected the company to report earnings of 71 cents per share on revenue of $1.75 billion. Analysts, on average, expected the company to report earnings of 71 cents per share on revenue of $1.75 billion. 

Recently, the company raised its revenue outlook for its fiscal fourth quarter, citing stronger-than-expected demand in the mobile and wireless markets. Broadcom Corp. said that it now expects fourth quarter net revenue at the top end of its prior range, at $1.9 billion. Previously, the company had estimated revenue in the range of $1.8 billion to $1.9 billion.

The company has benefited from sturdy demand for products in its mobile markets. Broadcom is well placed in the fast-growing wired and wireless communications markets, with cutting-edge solutions for a growing number of connected users who are demanding more content and bandwidth. The market for wireless connectivity devices are expected to grow, driven by the increasing demand for smartphones, tablets, netbooks and digital TVs. Broadcom is focused on the most innovative technologies related to connectivity, bandwidth and content. Broadcom’s product leadership and solid financial performance and strong cash flow generation continue to be strong positives. 

Meanwhile, smartphone chipmakers and hardware manufacturers are poised for substantial growth in 2011 on the strength of even stronger smart phone sales. Infrastructure growth and improvements worldwide have created more markets for the smartphone. The rapidly growing, billion plus populations of China and India, for example, still have relatively low smartphone sales. Between the two countries, there are under 200 million smartphone users combined.

Full Disclosure: None.
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