Broadcom Easily Beats

Broadcom Corporation ( BRCM - Analyst Report ) reported a net income of $160 million or 28 cents per diluted share in the second quarter of 2012. Excluding one-time items, earnings per share came in at 49 cents, easily beating the Zacks Consensus Estimate of 43 cents.

Broadcom generated revenues of $1.971 billion in the second quarter of 2012, an increase of 9.7% year over year and 7.9% sequentially, and within management’s projection of $1.9 billion – $2.0 billion.

Excluding the impact of acquisitions, revenue was up 5% sequentially from a year ago.

In terms of end markets, the Broadband Communications revenue was up 10% sequentially driven by growth in broadband access solutions for both cable operators and telecommunications service providers. This growth was partially offset by the anticipated decline in Blu-ray and DTV.

Mobile & Wireless segments were up 3% from the first quarter, better than management’s expectations due to wireless connectivity. Strong growth in Wi-Fi combos and 3G basebands more than offset the anticipated softness in 2G basebands and multimedia coprocessors.

Smartphones continue to be growth drivers and management continues to gain traction at Samsung, China Unicom, Vodafone, etc.

Including the full quarter impact of NetLogic, revenue from Infrastructure & Networking segment grew 18% sequentially. Excluding NetLogic, revenues were approximately 6% driven principally by growth in switching products.

On a product basis, product revenue were up 10.0% year over year to $1.9 billion. Income from the Qualcomm agreement came in at $48 million, down from $52 million at the end of the year-ago quarter. License revenues came in at $6 million.

Margins:Product gross margin came in at 52.2%, up from 52.0% in the previous quarter and 51.1% in the year-ago quarter.

Balance Sheet: During the quarter, Broadcom generated $349 million in cash from operations and used $50.0 million for capital expenditures. The company did not repurchase any shares in the quarter.

Accounts receivable days sales outstanding were 38 days in the quarter, flat with the previous quarter. Inventory levels came in at $528 million, up from $421 million in the quarter.

Broadcom ended the quarter with cash and equivalents of $1.3 billion, flat with the December quarter. This was primarily due to a net cash payment of $1.79 billion for BroadlLight and quarterly dividend payment of $56 million.

Guidance:For the third quarter of 2012, Broadcom projects revenues around $2.0 billion - $2.15 billion. The growth is expected to be driven by the Broadband segment. Infrastructure & Networking segment and other Mobile & Wireless segment are also expected to grow while Product gross margin is expected to remain roughly flat.