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McGregor Debuts With Profits

Scott McGregor debuted before Wall Street Thursday as Broadcom Corp. reported a surge in profits for the fourth quarter.

The Irvine chipmaker posted a net profit of $71 million for the quarter, up from $6 million a year ago.

Sales for the quarter rose 12% from a year ago to $539 million. But that was down 17% from the third quarter’s $646.5 million in sales. An oversupply of chips,a scenario that appears to be fading,caused the sequential decline.

“Our fourth quarter results were negatively impacted by the industrywide inventory correction that affected all of Broadcom’s business groups,” said McGregor, who took over as Broadcom’s chief executive at the start of the year. “Our focus remains on entering new markets and bringing new products into existing markets, a focus that should enable Broadcom to be successful in the long-term.”

This was McGregor’s first quarterly call with analysts. He most recently served as chief executive of Philips Semiconductors, part of Royal Philips Electronics NV, which also reported earnings Thursday.

McGregor was tapped to lead Broadcom in October. He replaced Alan “Lanny” Ross, who himself replaced cofounder Henry “Nick” Nicholas in early 2003.

Ross continues to serve as a Broadcom director.

Analysts hit McGregor with questions about Broadcom’s inventory, which drew concern from Wall Street last year after it suddenly increased during the summer.

Broadcom officials said inventory came down in the fourth quarter, declining to $128 million from $177 million in the earlier quarter.

“We increased inventory turns,” said Bill Ruehle, Broadcom’s chief financial officer.

Analysts also queried McGregor on where he thought the company would see growth. McGregor pointed to the company’s wireless and mobile chip divisions, which make Wi-Fi and Bluetooth chips for electronics such as portable computers and wireless phones.

Broadcom would continue to see weak business in its struggling server chip business, Ruehle said.

McGregor also talked about his first month on the job.

“I’ve been spending a lot of time with the Broadcom team,” he said. “I also met a large number at the CES trade show. As the new guy, it was a great opportunity to get some feedback. And I’m happy to report the feedback was positive.”

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