• Headquarters: 5300 California Ave., Irvine <br>• Employees: 9,051; 2,267 in OC<br>• Business: chipmaker<br>• Market value as of April 1: $22 billion <br>• 2010 revenue: $6.8 billion, up 52%<br>• 2010 net income: $1.08 billion, up 155%
Year in Review
Broadcom saw record sales and profits last year with stepped up demand for its chips for tablet computers, smartphones, set-top boxes, broadband modems, networking gear and other products. Acquisitions also helped push up the company’s sales to $6.8 billion, up 52% from a year earlier.
The gain made Broadcom the biggest ad-vancer in the ranks of the top 10 on our 2011 list of the largest public companies here. It moved from No. 6 a year ago to No. 3, behind Santa Ana’s Ingram Micro Inc. and Irvine’s Western Digital Corp., putting technology companies in the top three spots on our list.
Broadcom also outpaced the larger chip industry, which saw revenue grow 25% last year.
The company “far surpassed our 2010 financial goals of gaining market share,” Chief Executive Scott McGregor said on a February conference call with analysts and investors.
Broadcom made a handful of acquisitions in 2010.
In November, it bought Israel’s Percello Ltd. for $86 million, Northern California’s Gigle Networks Inc. for up to $83 million and Israel’s Sightic Vista Ltd. for an estimated $10 million to $20 million.
Earlier in 2010 it bought Santa Clara’s Beceem Communications Inc. for $316 million and Britain’s Innovision Research & Technology PLC for $47.5 million.
What’s Ahead
Company executives and Wall Street analysts expect continued growth for Broadcom this year, albeit at a more tempered pace than in 2010, a big rebound year.
“Broadcom is benefiting from some very powerful long-term trends entering 2011,” McGregor said.
Some on Wall Street expect first-quarter results to come in better than expected. But there are competition concerns in key markets such as wireless network gear, corporate networking and smartphones.
Acquisitions are likely to continue.
In March, Broadcom said it was paying $313 million for Israel’s Provigent Ltd., a maker of chips for wireless network operators that allow for the transfer of voice, data and video signals from cellular base stations to their main network.
One analyst believes Broadcom needs to make a big acquisition to remain competitive in wireless phones.
Srini Pajjuri of Hong Kong’s CLSA Asia-Pacific Markets said recent moves by San Diego’s Qualcomm Inc. and Finland’s Nokia Corp. could crimp sales of Broadcom’s wireless chips.
“We have long argued that (Broadcom) may need a larger acquisition, and the recent developments in the industry only hasten the need for such a move, in our view,” Pajjuri wrote in a research report.
Possible targets: Switzerland’s ST-Ericsson SA or NXP Semiconductors NV of the Netherlands.
Wall Street’s Take
Broadcom’s shares are up 20% in the past 12 months to a recent market value of nearly $22 billion.
In March, an analyst with Arlington, Va.-based FBR Capital Markets Corp. maintained an “outperform” rating on Broadcom shares.
The company faces competitive issues in the first half of the year but should see “smartphone mania” continue in the second half, the analyst said.
Analysts on average expect Broadcom’s sales to rise 15% this year to $7.9 billion. Adjusted profits are seen staying largely flat at $1.5 billion.
