Headquarters: 5300 California Ave., Irvine
Employees: 6,363; 1,848 in OC
Business: chipmaker
Market value: $11 billion
Revenue for 12 months ended Dec. 31: $3.8 billion, up 3%
Net income for 12 months ended Dec. 31: $213 million, down 44%
Year in review:
2007 was big for Broadcom, which posted the largest options restatement bill of any company, won several legal rounds against Qualcomm Inc. and then slumped late in the year.
Juries in Santa Ana and San Diego found in favor of Broadcom in a long-running series of patent suits with San Diego’s Qualcomm, which has paid about $20 million in damages to Broadcom.
In June, a federal trade group handed down another punishment to Qualcomm,a ban on sales of some cell phone chips in the U.S.
Qualcomm has unsuccessfully appealed several times to have the ban put on hold or lifted altogether.
Broadcom struck a licensing deal with the wireless unit of New York-based Verizon Communications Inc. to get around the ban. Broadcom gets a $6 royalty for each phone with the contested chip, to the tune of about $40 million in the fourth quarter.
The company stepped up its legal attack later in the year, moving beyond patent fights to an assault on Qualcomm’s business practice of licensing technology.
Broadcom made a handful of chip buys in the past year. In May, it paid $31 million for privately held Octalica Inc., which is based in Newton Centre, Mass., and has engineers in Israel.
In June, it paid roughly $143 million for Global Locate Inc., a San Jose maker of global positioning system chips and software. Last month, the company said it bought Sunnyvale-based Sunext Design Inc., a maker of chips for high-definition video players, for some $48 million.
Perhaps the biggest event for the company in 2007: a $2.2 billion restatement of past earnings to correct misdated stock option grants.
The tally is the biggest of some 150 companies that were investigated for suspected stock options manipulation.
The issue has brought federal investigations of past and current Broadcom executives.
Late in the year, several analysts cut their ratings on Broadcom over concerns about falling profits, oversupply of chips and a slowdown amid the larger economic downturn.
What’s ahead:
No one at Broadcom, other than former human resources executive Nancy Tullos, has been charged in the options probe.
But there’s lots of chatter about looming indictments of former chief executive and cofounder Henry Nicholas, and possibly cofounder, Chairman and Chief Technology Officer Henry Samueli.
Other current and past executives also could be charged by federal prosecutors.
In January, Broadcom reported strong fourth-quarter results but was cautious about its gross margin in the first quarter with production of new products.
Like other chipmakers, Broadcom is awaiting a rebound in the chip sector, which some industry watchers hope to see in the second half.
The company could see gains in consumer electronics gadgets, including Apple Inc.’s iPhone, Nintendo Co.’s Wii and others.
Expect to see continued fights with Qualcomm,or maybe a settlement with licensing deals.
Wall Street’s Take:
Investors are down on Broadcom with a 50% drop in market value since late fall. The company has seen downgrades in recent months as investment banks have grown cautious on prospects for a chip turnaround later this year.
In March, Morgan Stanley lowered its profit estimates on Broadcom and other chipmakers saying it’s “still too early” to buy the shares because of expectations for a more muted economic recovery in the second half of the year.
For the current quarter, Broadcom forecasts revenue of $975 million to $1 billion, in line with expectations.
,
Sarah Tolkoff
WHO’S IN CHARGE
Chief executive, Broadcom
Joined Company:
2005
Education:
bachelor’s, master’s in computer science and engineering, Stanford University
Career:
Was head of Royal Philips Electronics NV’s chip unit, Philips Semiconductors, from 2001 through 2004. Joined Philips in 1998 as head of its emerging business unit, which covered smart cards, radio frequency identification technology and digital media. Before Philips, held various positions with network device maker Santa Cruz Operation Inc. from 1990 on. Prior to that he was with Digital Equipment Corp., Microsoft Corp. and Xerox Corp.’s Palo Alto Research Center.
Notable:
Writes an internal blog that charts his recent trips or thoughts about the company.
