Broadcom Corporation (BRCM) generated revenues of $1.796 billion in the second quarter of 2011, up 12% year over year but down 1% sequentially and slightly missed the Zacks Consensus Estimate of $1.806 billion.
In terms of end-markets, the Broadband Communications segment was up slightly less than expected, principally due to weakness in consumer electronics and some continued inventory issues in set-top box. The Mobile & Wireless segment was down as anticipated due to some softness at a number of key customers. The Infrastructure and Networking segment was roughly flat as expected.
On a product basis, product revenue grew 13.0% year over year to $1.74 billion. Income from the Qualcomm (QCOM) agreement was $51.7 million. License revenues declined 57% year over year to $3.0 million.
Margins: Product gross margin declined to 51.1% from 51.8% in the year-ago quarter but was up from 48.9% in the previous quarter.
Broadcom’s net income came in at $175 million or $0.31 per share compared to a net income of $278 million or $0.52 per share in the year-ago quarter and a net income of $228 million or $0.40 per share in the previous quarter. Excluding one-time items, net income per share came in at $0.48, easily beating the Zacks Consensus Estimate of $0.40.
Balance sheet: During the quarter, Broadcom generated $489 million of cash from operations and used $52.0 million for capital expenditures. Accounts receivable days sales outstanding were 35 days in the quarter compared to 38 days in the previous quarter.
Broadcom returned $300 million in capital to shareholders in the quarter in the form of dividends and share repurchases. The company repurchased approximately 17 million shares. The company also spent $350 million for the acquisitions of Provigent and SC Square. Broadcom ended the quarter with cash and equivalents of $1.8 billion, up from $1.6 billion at the end of first quarter.
Guidance: For the third quarter of 2011, Broadcom projects revenues around $1.9 billion – $2.0 billion, in line with the Zacks Consensus Estimate of $1.9 billion. Management expects revenues from all segments to be up sequentially. The company expects revenues from Mobile & Wireless business to rebound sharply, up double digits driven by strength across all lines of business. Revenue from Broadband Communications segment is expected to be up as inventory correction is almost over.
The better-than-expected results and guidance impressed investors. Shares of Broadcom surged 8.11% in after-hours trading to close at $37.74.
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