Broadcom Reports Third Quarter 2009 Results

Conference Call to be Webcast Today at 1:45 p.m. Pacific Time

• Press Release
• Source: Broadcom Corporation; BRCM Corporate
• On 4:05 pm EDT, Thursday October 22, 2009

IRVINE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- Broadcom Corporation (Nasdaq: BRCM - News) today reported unaudited financial results for its third quarter ended September 30, 2009.

Net revenue for the third quarter of 2009 was $1.254 billion. This represents an increase in net revenue of 20.6% compared with the $1.040 billion reported for the second quarter of 2009 and a decrease of 3.4% compared with the $1.298 billion reported for the third quarter of 2008. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the third quarter of 2009 was $84.6 million, or $.16 per share (diluted), compared with GAAP net income of $13.4 million, or $.03 per share (diluted), for the second quarter of 2009, and GAAP net income of $164.9 million, or $.31 per share (diluted), for the third quarter of 2008.

Net revenue for the nine months ended September 30, 2009 was $3.148 billion. This represents a decrease in net revenue of 10.9% from the $3.532 billion reported for the nine months ended September 30, 2008. Net income computed in accordance with GAAP for the nine months ended September 30, 2009 was $6.1 million, or $.01 per share (diluted), compared with GAAP net income of $374.0 million, or $.70 per share (diluted), for the nine months ended September 30, 2008.

For a discussion of non-recurring transactions and their related accounting impact for all periods presented, see the "Unaudited Supplementary Financial Data" schedule below.

"Broadcom executed well in the third quarter, generating revenue growth of over 20% sequentially for the second quarter in row," said Scott A. McGregor, Broadcom's President and Chief Executive Officer. "This strong revenue growth is well above the semiconductor industry growth rate, and was driven by a combination of our target markets continuing to recover, new product ramps and the breadth of Broadcom's product line."

"In addition, Broadcom was successful in generating strong sequential gross and operating margin leverage and cash flow from operations in the quarter. The third quarter spending included an unforecasted increase in performance-based compensation, which grew significantly due to Broadcom's strong operating performance, showing our continued focus on generating positive financial leverage."

Conference Call Information

As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its third quarter 2009 financial results and current financial prospects today at 1:45 p.m. Pacific Time (4:45 p.m. Eastern Time). The company will broadcast the conference call via webcast over the Internet. To listen to the webcast, or to view the financial or other statistical information required by Securities and Exchange Commission (SEC) Regulation G, please visit the Investors section of the Broadcom website at www.broadcom.com/investors. The webcast will be recorded and available for replay until 5:00 p.m. Pacific Time, December 2, 2009.

About Broadcom

Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom(®) products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything(®).

Broadcom, one of the world's largest fabless semiconductor companies, with 2008 revenue of $4.66 billion, holds more than 3,650 U.S. and 1,450 foreign patents, and has more than 7,750 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.

A FORTUNE 500® company, Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000 or at www.broadcom.com.

Cautions regarding Forward Looking Statements:

All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to, guidance provided on future revenue, gross product margin and operating expense targets for the fourth quarter of 2009. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

These risks and uncertainties include, but are not limited to:

• general economic and political conditions and specific conditions in the markets we address, including the continuing volatility in the technology sector and semiconductor industry, the recent global economic recession, trends in the broadband communications markets in various geographic regions, including seasonality in sales of consumer electronic products into which our products are incorporated, and possible disruption in commercial activities related to terrorist activity or armed conflict;
• the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory;
• our ability to adjust our operations in response to changes in demand for our existing products and services or demand for new products requested by our customers;
• the effectiveness of our expense and product cost control and reduction efforts;
• our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a cost-effective and timely manner;
• risks and uncertainties resulting from Broadcom's equity award review, including pending and potential new claims and proceedings related to such matters, such as shareholder litigation and any action by the SEC, U.S. Attorney's Office or other governmental agency that has resulted in, and could result in further, civil or criminal sanctions against the company and/or certain of our current or former officers, directors or employees, or other actions taken or required as a result of the review, and the extent to which we are able to receive reimbursement of our expenses related to such litigation and actions through our directors' and officers' liability insurance carriers. In the event that the company's coverage under these policies is reduced or denied or if the proposed partial settlement of the federal derivative litigation does not receive final court approval, our financial exposure would be increased;
• the risks inherent in acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, potential contractual, intellectual property or employment issues, the risk that anticipated benefits of an acquisition may not be realized, and accounting treatment and charges;
• changes in current or future laws or the imposition of new laws or regulations, including new or changed tax regulations, or changes in the interpretation or enforcement of those laws or regulations;
• our dependence on a few significant customers for a substantial portion of our revenue;
• intellectual property disputes and customer indemnification claims and other types of litigation risk;
• the quality of our products and any potential remediation costs;
• our ability to retain, recruit and hire key executives, technical personnel and other employees in the positions and numbers, with the experience and capabilities, and at the compensation levels needed to implement our business and product plans;
• the availability and pricing of third party semiconductor foundry, assembly and test capacity and raw materials;
• fluctuations in the manufacturing yields of our third party semiconductor foundries and other problems or delays in the fabrication, assembly, testing or delivery of our products
• the rate at which our present and future customers and end-users adopt Broadcom's technologies and products in our target markets;
• competitive pressures and other factors such as the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products;
• changes in our product or customer mix;
• the risks and uncertainties associated with our international operations;
• our ability to timely and accurately predict market requirements and evolving industry standards and to identify opportunities in new markets;
• the volume of our product sales and pricing concessions on volume sales;
• problems, costs or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration;
• the risks of producing products with new suppliers and at new fabrication and assembly and test facilities;
• delays in the adoption and acceptance of industry standards in our target markets;
• the timing of customer-industry qualification and certification of our products and the risks of non-qualification or non-certification; and
• the level of orders received that can be shipped in a fiscal quarter.

Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release and the related conference call for analysts and investors speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement, except as required by law.

Broadcom, the pulse logo, Connecting everything, and the Connecting everything logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Any other trademarks or trade names mentioned are the property of their respective owners.

    Broadcom Trade Press Contact           Broadcom Investor Relations Contact
    Bill Blanning                          T. Peter Andrew
    Vice President, Global Media           Vice President, Corporate
     Relations                              Communications
    949-926-5555                           949-926-5663
    blanning@broadcom.com                  andrewtp@broadcom.com

                          BROADCOM CORPORATION
          Unaudited Condensed Consolidated Statements of Income
                (In thousands, except per share amounts)

                                    Three Months Ended     Nine Months Ended
                                       September 30,         September 30,
                                    ------------------     -----------------
                                     2009        2008       2009       2008
                                     ----        ----       ----       ----

     Product revenue             $1,194,745  $1,254,083 $2,989,292 $3,409,051
     Licensing revenue               59,452      44,392    158,285    122,565
                                     ------      ------    -------    -------
       Total net revenue          1,254,197   1,298,475  3,147,577  3,531,616
     Operating costs and
      expenses:
       Cost of product revenue      615,349     619,459  1,580,300  1,655,218
       Research and development     391,170     379,279  1,138,664  1,115,002
       Selling, general and
        administrative              142,480     141,941    394,938    395,904
       Amortization of purchased
        intangible assets             4,159         183     12,457        550
       In-process research and
        development                       -           -          -     10,900
       Impairment of long-lived
        assets                        7,634         250     18,895      2,150
       Restructuring costs
        (reversals)                   4,772           -     12,330     (1,000)
       Settlement costs (gains)           -           -    (57,256)    15,810
       Charitable contribution            -           -     50,000          -
                                        ---         ---     ------        ---
         Total operating costs
              and expenses        1,165,564   1,141,112  3,150,328  3,194,534
                                  ---------   ---------  ---------  ---------
     Income (loss) from
      operations                     88,633     157,363     (2,751)   337,082
     Interest income, net             2,978      12,451     11,362     44,983
     Other income (expense), net       (178)     (3,720)     2,487     (2,987)
                                      -----     -------      -----    -------
     Income before income taxes      91,433     166,094     11,098    379,078
     Provision for income taxes       6,837       1,188      5,041      5,069
                                      -----       -----      -----      -----
     Net income                     $84,596    $164,906     $6,057   $374,009
                                    =======    ========     ======   ========
     Net income per share (basic)      $.17        $.32       $.01       $.72
                                       ====        ====       ====       ====
     Net income per share (diluted)    $.16        $.31       $.01       $.70
                                       ====        ====       ====       ====
     Weighted average shares
      (basic)                       495,491     509,041    493,599    517,418
                                    =======     =======    =======    =======
     Weighted average shares
      (diluted)                     521,443     523,759    508,559    531,187
                                    =======     =======    =======    =======

    The following table presents details of total stock-based compensation
    expense included in each functional line item in the unaudited condensed
    consolidated statements of income above:

                                         Three Months Ended  Nine Months Ended
                                            September 30,       September 30,
                                         ------------------  -----------------
                                          2009      2008       2009      2008
                                          ----      ----       ----      ----
     Cost of product revenue             $6,579    $6,652    $18,584   $18,354
     Research and development            90,829    93,334    266,698   262,043
     Selling, general and
      administrative                     31,290    33,328     89,817    93,661

    Certain prior period amounts in the unaudited condensed consolidated
    statements of income have been reclassified to conform with the current
    period presentation of product and licensing revenue.

                          BROADCOM CORPORATION
        Unaudited Condensed Consolidated Statements of Cash Flows
                             (In thousands)

                                  Three Months Ended       Nine Months Ended
                                     September 30,           September 30,
                                  ------------------       -----------------
                                   2009        2008         2009       2008
                                   ----        ----         ----       ----
     Operating activities
     Net income                   $84,596    $164,906      $6,057    $374,009
     Adjustments to reconcile
      net income to net cash
      provided by operating
      activities:
       Depreciation and
        amortization               11,273      19,351      47,314      55,770
       Stock-based compensation
        expense:
         Stock options and
          other awards             40,904      53,684     126,461     168,891
         Restricted stock
          units                    87,794      79,630     248,638     205,167
       Acquisition-related
        items:
         Amortization of
          purchased
          intangible assets         8,035       4,118      24,558      12,354
         In-process
          research and
          development                   -           -           -      10,900
       Impairment of long-lived
        assets                      7,634         250      18,895       2,150
       Loss on strategic
        investment, net                 -       2,506           -       4,266
       Non-cash restructuring
        costs                         808           -       3,471           -
       Loss (gain) on sale of
        marketable securities           -       1,781      (1,046)      1,781
       Changes in operating
        assets and liabilities:
         Accounts receivable      (97,541)    (21,183)   (169,276)   (131,998)
         Inventory                (27,918)    (66,259)     58,890     (91,292)
         Prepaid expenses
          and other assets         27,758     (20,387)     19,972      (1,629)
         Accounts payable          32,764      23,503     112,525     147,332
         Deferred revenue         (19,944)      1,618      80,822      (8,962)
         Other accrued and
          long-term liabilities    80,301      42,712      77,684      24,719
                                   ------      ------      ------      ------
           Net cash provided by
            operating activities  236,464     286,230     654,965     773,458
                                  -------     -------     -------     -------
     Investing activities
     Net purchases of property
      and equipment               (22,480)    (16,084)    (48,774)    (65,151)
     Net cash received from
      (paid for) acquired
      companies                    (1,297)        (57)        842     (29,795)
     Purchases of strategic
      investments                  (2,000)          -      (2,000)       (355)
     Purchases of marketable
      securities                 (546,922)   (771,993) (1,057,972) (1,110,514)
     Proceeds from sales and
      maturities of marketable
      securities                  315,532     291,424     737,377     512,022
                                  -------     -------     -------     -------
           Net cash used in
            Investing
            activities           (257,167)   (496,710)   (370,527)   (693,793)
                                ---------   ---------   ---------   ---------
     Financing activities
     Repurchases of Class A
      Common stock               (168,083)    (23,912)   (206,517)   (859,775)
     Proceeds from issuance
      of common stock              53,535      23,968     137,229     114,582
     Minimum tax withholding
      paid on behalf of
      employees for restricted
      stock units                 (26,046)    (19,433)    (60,574)    (45,186)
                                 --------    --------    --------    --------
           Net cash used in
            financing
            activities           (140,594)    (19,377)   (129,862)   (790,379)
                                ---------    --------   ---------   ---------
     Increase (decrease) in
      cash and cash equivalents  (161,297)   (229,857)    154,576    (710,714)
     Cash and cash equivalents
      at beginning of period    1,506,518   1,705,715   1,190,645   2,186,572
                                ---------   ---------   ---------   ---------
     Cash and cash equivalents
      at end of period         $1,345,221  $1,475,858  $1,345,221  $1,475,858
                               ==========  ==========  ==========  ==========

    UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION


                                       September 30,   June 30,   December 31,
                                            2009         2009        2008
                                       ------------    -------    -----------
                                                    (In thousands)
     Cash and cash equivalents          $1,345,221   $1,506,518   $1,190,645
     Short-term marketable securities      561,287      700,585     707,477
     Long-term marketable securities       470,643       92,699           -
                                           -------       ------         ---
     Total cash, cash equivalents and
      marketable securities             $2,377,151   $2,299,802   $1,898,122
                                        ==========   ==========   ==========
     Increase from prior period end        $77,349
                                           =======
     Increase from prior year end         $479,029
                                          ========

                                     BROADCOM CORPORATION
                         Unaudited Condensed Consolidated Balance Sheets
                                         (In thousands)

                                                   September 30,  December 31,
                                                        2009          2008
                                                        ----          ----
     ASSETS
     Current assets:
       Cash and cash equivalents                    $1,345,221     $1,190,645
       Short-term marketable securities                561,287        707,477
       Accounts receivable, net                        541,587        372,311
       Inventory                                       307,216        366,106
       Prepaid expenses and other current assets        95,296        114,674
                                                        ------        -------
         Total current assets                        2,850,607      2,751,213
     Property and equipment, net                       228,621        234,691
     Long-term marketable securities                   470,643              -
     Goodwill                                        1,277,951      1,279,243
     Purchased intangible assets, net                   21,324         61,958
     Other assets                                       67,019         66,160
                                                        ------         ------
         Total assets                               $4,916,165     $4,393,265
                                                    ==========     ==========
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                               $423,199       $310,487
       Wages and related benefits                      182,394        157,758
       Deferred revenue                                 96,421         12,338
       Accrued liabilities                             301,371        236,520
                                                       -------        -------
         Total current liabilities                   1,003,385        717,103
     Long-term deferred revenue                            637          3,898
     Other long-term liabilities                        62,688         65,197
     Commitments and contingencies
     Shareholders' equity                            3,849,455      3,607,067
                                                     ---------      ---------
         Total liabilities and shareholders'
          equity                                    $4,916,165     $4,393,265
                                                    ==========     ==========

                          BROADCOM CORPORATION
                 Unaudited Supplementary Financial Data
                             (In thousands)

    The following table presents details of supplementary financial data
    included in each functional line item in the unaudited condensed
    consolidated statements of income:

                                         Three Months Ended  Nine Months Ended
                                             September 30,     September 30,
                                         ------------------  -----------------
                                             2009    2008      2009    2008
                                             ----    ----      ----    ----
     Cost of product revenue:
     Stock-based compensation               $6,579  $6,652   $18,584  $18,354
     Amortization of purchased
      intangible assets                      3,876   3,935    12,101   11,804

     Research and development:
     Stock-based compensation               90,829  93,334   266,698  262,043

     Selling, general and administrative:
     Stock-based compensation               31,290  33,328    89,817   93,661

     Other operating expense:
     Amortization of purchased intangible
      assets                                 4,159     183    12,457      550
     In-process research and development(1)      -       -         -   10,900
     Impairment of long-lived assets(2)      7,634     250    18,895    2,150
     Restructuring costs (reversals)(3)      4,772       -    12,330   (1,000)
     Settlement costs (gains)(4)                 -       -   (57,256)  15,810
     Charitable contribution(5)                  -       -    50,000        -

     Other:
     Employer payroll tax expense on certain
      stock option exercises                 1,625   1,532     3,566    3,631
     Loss on strategic investments, net          -   2,506         -    4,266
     Non-operating gains                        27    (193)       13     (193)

    (1) Recorded in connection with the company's acquisition of Sunext
        Design, Inc. in the nine months ended September 30, 2008.

    (2) Long-lived asset impairment charges of $11.3 million and $7.6 million
        related to the company's acquisition of the digital television
        business of AMD, Inc. were recorded in the three months ended June 30,
        2009 and September 30, 2009, respectively.

    (3) Recorded in connection with the company's restructuring plans
        announced or implemented in the nine months ended September 30, 2009,
        as well as a restructuring cost reversal of a prior restructuring plan
        in the nine months ended September 30, 2008.

    (4) Recorded a $65.3 million gain on settlement in connection with the
        QUALCOMM litigation, offset in part by estimated additional settlement
        costs of $6.9 million related to certain employment tax items and an
        additional $1.2 million related to patent infringement claims in the
        nine months ended September 30, 2009.  Recorded settlement costs of
        $15.8 million, of which $12.0 million related to Broadcom's settlement
        with the Securities and Exchange Commission and $3.8 million related
        to a patent infringement claims settled in the nine months ended
        September 30, 2008.

    (5) Recorded in connection with an accrued $50.0 million charitable
        contribution to the recently established Broadcom Foundation in the
        nine months ended September 30, 2009.

                          BROADCOM CORPORATION
                 Unaudited Supplementary Financial Data
                             (In thousands)

                                        Three Months Ended
                                        ------------------
                             September 30,  September 30,    June 30,
                                  2009           2008          2009
                             -------------  -------------    --------
     Product revenue            $1,194,745     $1,254,083      $966,317
     Licensing revenue              59,452         44,392        73,627
                                    ------         ------        ------
          Total net revenue     $1,254,197     $1,298,475    $1,039,944
                                ==========     ==========    ==========
     Cost of product revenue      $615,349       $619,459      $518,674
                                  ========       ========      ========
     Product gross margin(1)          48.5%          50.6%         46.3%
                                     =====          =====         =====
     Total gross margin               50.9%          52.3%         50.1%
                                     =====          =====         =====

    (1) Product gross margin in the three months ended September 30, 2008 has
        been adjusted from 50.9% to 50.6% to conform with the current period
        presentation of product and licensing revenue.

                          BROADCOM CORPORATION
         Guidance for the Three Months Ending December 31, 2009

                                               Three Months
                                         Ending December 31, 2009
                                         ------------------------
     Total net revenue                         Flat from Q3

     Product gross margin      Increase by around 20 - 50 basis points from Q3

     Research and development
      and selling, general and
      administrative expenses
      (including stock-based
      compensation)                         Up ~$20 million from Q3

Broadcom has based the preceding guidance for the three months ending December 31, 2009 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of October 22, 2009. Our guidance consists of predictions only, however, and is subject to a wide range of known and unknown business risks and uncertainties, many of which are beyond our control. The forecasts and projections contained in the table above should not be regarded as representations by Broadcom that the estimated results will be achieved. Projections and estimates are necessarily speculative in nature and actual results may vary materially from the guidance we provide today.

The guidance set forth in the table above should be read together with the information under the caption, "Cautions regarding Forward Looking Statements" above, our Annual Report on Form 10-K for the year ended December 31, 2008, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein.

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