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Broadcom hits record revenues, boosts dividend, but stock slips after hours

February 1, 2011 |  2:06 pm


Irvine-based chip-maker Broadcom Corp. on Tuesday reported a profitable quarter, with record sales of $1.95 billion, a 45% increase over the same quarter last year. The company also announced a 12.5% increase in per-share dividend, to 36 cents per share per year.

Investors, it seems, were hoping for more: Though Broadcom's stock traded up 2.88% during regular trading, to $46.39, it quickly shed more than 5% after hours, to hover around $44.17.

“It appears that the weakness in the stock is due to Broadcom's gross margins on the quarter being a bit lighter than expected,” said Brian Blair, an analyst with Wedge Partners.  Gross margins are a financial indicator of how well a company has been able to hold down its production costs, compared to how much revenue its products are bringing in.

The company's profits of $266 million, or 47 cents per share on a diluted basis -- up from $59.2 million during the same quarter last year.

Broadcom supplies chips to hundreds of communications devices -- Web servers as well as popular consumer gadgets such as the iPhone, iPad, Wii and Android phones.  Apple's iPad and iPhone, for which Broadcom supplies Bluetooth and WiFi chips, had record sales quarters over the holiday -- a benefit to Broadcom.

The company also announced its annual results, which included $6.82 billion in sales -- a 52% increase over last year, and $1.08 billion in profits.

The company's dividend boost came with a $300-million stock buyback plan, which Broadcom's chief executive, Scott McGregor, said was initiated by the company's board with an eye to giving cash back to investors.

"Broadcom's strong growth and powerful operating cash flow drive our ability to increase the return of capital to our investors while fueling our business organically and through M&A," said McGregor in a statement.  "A higher dividend, accelerated share repurchases and our evergreen share repurchase program reflect our continued commitment to returning capital to our shareholders.

The Los Angeles Times profiled Broadcom and its sometimes-turbulent history in a story Tuesday.

Corrected 2:47 p.m.: An earlier version of this post cited Broadcom's earnings per share of 47 cents, and suggested that may have disappointed investors, who were expecting closer to 57 cents.  But the post neglected to take into account one-time charges the company took that amounted to about 10 cents per share -- putting the profits in line with investor expectations.

-- David Sarno

Photo: The Broadcom logo is stamped on a Broadcom circuit board displayed in the company's demonstration room at its the Irvine headquarters.  Credit: Mark Boster / Los Angeles Times