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Broadcom: Inventory Issue Waning

Sales at Irvine-based Broadcom Corp. fell in the March quarter, but the chipmaker still managed to boost profits and said it expects the inventory problems in the past few quarters to largely be over.

Broadcom said Thursday that the company’s revenue fell 4% to $550 million in the first quarter. Net income was up 73% to $69 million. The results narrowly beat Wall Street estimates.

The chipmaker said it expects sales to grow 4% to 5% in the second quarter to about $575 million.

“We were pleased with our progress in the first quarter as revenue increased over the fourth quarter of 2004 and the company again generated strong cash flow from operations, leading to record levels of cash and marketable securities,” said Scott McGregor, Broadcom’s chief executive. “Looking forward, we are experiencing a strengthening in customer orders, leading us to believe that many of the customer inventory issues that affected our fourth and first quarter results are now behind us.”

This is McGregor’s second quarter before Wall Street. He took over as chief executive from Alan “Lanny” Ross earlier this year. McGregor was chief executive of Philips Semiconductors, part of Royal Philips Electronics NV, before joining Broadcom.

Shares of the company were up 2% to $30.1 in after-hours trading.

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