Broadcom Corporation (BRCM) reported revenues of $1.34 billion in the fourth quarter of 2009, up 7.1% from the prior quarter and up 19.2% from the year-ago quarter.
The sequential revenue growth in the quarter was a result of overall strength in broadband and enterprise businesses, which were up 14% and 18% respectively but partially offset by an expected seasonal decline in mobile and wireless business. The upside in revenue was driven by new product ramps, normal customer order patterns, and a better-than-expected holiday season along with strong demand from customers in Asia.
Gross margin came in at 53.1% compared to 50.5% in the year-ago quarter and 50.9% in the previous quarter. Product gross margin increased 240 basis points to 50.9% from 48.5% in the third quarter. Earnings per share (EPS) came in at 32 cents beating the Zacks Consensus Estimate of 23 cents.
Net revenue for 2009 was $4.49 billion, down 3.6% from a year ago.
Earlier, Broadcom had agreed to settle the pending securities class action litigation against the company and certain of its current and former officers and directors relating to the company’s historical stock option accounting practices. Under the proposed settlement, Broadcom will pay $160.5 million in cash to settle the litigation. The company recorded the settlement amount as a one-time charge in the fourth quarter.
During the quarter, Broadcom generated $332 million of cash from operations and used $215 million for repurchasing 7 million shares and $166 million for the acquisition of Dune Networks. The company ended the quarter with cash and equivalents of $1.4 billion.
Going forward, management expects revenue in the first quarter to be flat-to-up 5% sequentially in the fourth quarter. Revenue is expected to grow in all end markets. The guidance also implies a 50% year over year growth.
Broadcom also initiated a quarterly dividend of 8 cents per share in the fourth quarter.
The company also announced that it will acquire Teknovus, a leading supplier of Ethernet Passive Optical Network (EPON) chipsets and software, for $123 million in cash. EPON is a technology providing broadband service, providing up to 10 Gigabits per second over fiber optic cables. EPON represents approximately 94% of the FTTx (e.g. Fiber-to-the-Home) connections in the Asia Pacific region.
Broadcom expects that the acquisition of Teknovus will be approximately neutral to earnings per share in 2010. Management expects to close the acquisition by the first half of the year.
Broadcom consistently introduces highly integrated solutions in some of the fastest growing markets in the technology sector. Broadcom’s prospect of growth continues to outpace its peers, given its leading ability to integrate communications and processing.
California-based Broadcom is a leading chipmaker of products used in wired and wireless communications.
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