Broadcom CEO’s Remarks Help End Stock Price Free Fall
Broadcom Corp.’s stock recovered a bit Thursday from the precipitous slide that had knocked out nearly a third of its value in two days after Chief Executive Henry Nicholas III said he remains confident his company can continue to meet analysts’ expectations.
“We are very comfortable with analysts’ estimates for the current quarter,” Nicholas said in a news release. The company is expected to earn 31 cents a share, about double earnings per share in the fourth quarter last year, according to a First Call/Thomson survey of analysts.
Broadcom’s stock gained $10.44 a share, or 6.9%, on Thursday to close at $162.25 in Nasdaq trading. It had tumbled from a closing price of $219 per share Monday to $151.19 by the end of trading Wednesday on concerns that Cisco Systems Inc., its second-biggest customer, would cut back on orders. Cisco accounted for 17% of Broadcom’s revenues last quarter.
Nicholas said the company’s business “continues to be strong, and nothing has occurred to reduce our confidence.”
Also Thursday, Broadcom revealed new consumer-focused partnerships intended to propel its networking chips into the home.
Broadcom said it has teamed up with Gateway Inc., the San Diego-based computer retailer, to develop home-networking products, which allow people at home and in small offices to link computers, printers and other devices and access the Internet at high speeds over their phone lines.
As a first step, the top two lines of Gateway desktop PCs now include a Broadcom chip set for home networking at speeds of 10 megabits per second as a standard feature, Broadcom said. The chip sets have been included in all of Gateway’s Select and Performance PC lines for about a month.
Over time, additional products will be introduced to make it easy for households to share video, music and data files and to carry telephone calls over the Internet.
The new PCs can be plugged into a standard telephone line without the installation of new cables or other equipment.
As technological advances push the cost of such chips down, it has become possible for computer companies like Gateway to include them as standard features rather than expensive add-ons, said Jeff Thermond, the head of Broadcom’s home-networking unit.
Thermond would not disclose terms of Broadcom’s deal with Gateway, except to say that the chip sets are priced “in the teens,” and will be included in millions of Gateway PCs.
Gateway also said it would announce today a new Internet appliance with America Online Inc., Broadcom and Transmeta Corp.
The appliance, using Broadcom chips, will offer instant America Online service and home-networking capabilities.
