Broadcom Corp. (BRCM), Tuesday reported a significant rise in profit for the fourth quarter, due primarily to a 45 percent surge in revenues that came in ahead of Street expectations. Going forward, the company provided its guidance for the first quarter, with revenues expected in line with market projections. Nevertheless, investors were not overtly impressed sending Broadcom shares down 5 percent down in after-hours trade.
Separately, the company announced a 12.5 percent increase in quarterly dividend as well as a $300 million accelerated share buyback program.
The Irvine, California-based semiconductor developer's net income for the fourth quarter increased to $266.19 million or $0.47 per share from $59.20 million or $0.11 per share in the previous year. For the sequential third quarter, net income was $327 million or $0.60 per share.
Results for the fourth quarter include $0.11 per share of non-recurring settlement and asset impairment charges.
On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share for the quarter. Analysts' estimates typically exclude special items.
Total net revenue for the quarter increased 45 percent to $1.94 billion from $1.34 billion last year. For the sequential third quarter, net revenue was $1.81 billion. Analysts estimated revenues of $1.90 billion for the fourth quarter.
Product revenue increased to $1.89 billion from $1.28 billion a year ago. Income from Qualcomm agreement for both the periods was $51.67 million. Licensing revenue declined to $4.74 million from $7.64 million in the previous year.
Net other income for the quarter was $2.75 million, compared to an expense of $0.27 million last year.
Total gross margin for the quarter declined to 50.9 percent from 53.1 percent recorded in the prior year quarter. Product gross margin was 49.4 percent, down from 50.9 percent a year ago.
For the full year 2010, net income increased to $1.08 billion or $1.99 per share from $65.26 million or $0.13 per share in the previous year. Total net revenue increased to $6.82 billion from $4.49 billion last year.
Analysts estimated earnings of $2.71 per share, on revenues of $6.76 billion for the full year.
Scott McGregor, Broadcom's president and CEO, said, "Our record results, powerful balance sheet and strong operating cash flow enable us to increase our dividend by 12.5% and accelerate share repurchases, reflecting our continued commitment to returning capital to our shareholders. Looking ahead, we will focus on continuing to grow revenue faster than our peers and to gain share in our core markets, while maintaining financial discipline."
The company expects first-quarter revenues in the range of $1.75 billion to $1.85 billion. Analysts currently expect revenues of $1.80 billion for the first quarter.
In a separate release, Broadcom said its board has approved a 12.5 percent increase in the quarterly cash dividend to $0.09 cents per share or $0.36 per share on an annual basis, payable to holders of the company's Class A and Class B common stock. The dividend will be paid on March 7, 2011 to holders of record of the company's Class A and Class B common stock at the close of business on February 18, 2011.
The company also announced a $300 million accelerated share repurchase plan under its existing evergreen share repurchase program.
BRCM closed Tuesday's regular trading at $46.39, up $1.30 or 2.88%, on a volume of 11.99 million shares on the Nasdaq. In after hours, the stock declined $2.40 or 5.17%, trading at $43.99. In the past 52-week period, the stock trended in a range of $26.79 to $47.39, with a 3-month average volume of 6.35 million shares.
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