Broadcom wireless gains hides broadband slide

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Broadcom wireless gains hides broadband slide

Broadcom may be doing better in cellular markets, but its traditional business is economy constrained

By PETER WHITE

Published: 26 October, 2011

Broadcom says it is making more and more inroads into cellular chipsets. But its traditional markets are being subdued by the tough economy.

Reporting quarterly revenues up to $1.96 million, just a tad below the $2 billion mark, most of Broadcom's growth came from cellular, with its traditionally strong Broadband Communications down to $526 million, a fall of about 7% over the quarter a year ago, with a reduced operating income of $99 million. Mobile and Wireless segment jumped from $798 million to $942 with a slightly raised operating income at $171 million. The third segment, Infrastructure and Networking jumped $42 million to $437 million over this time last year.

The management talked up the cash flow generation from operations, which it says was 27% of revenue taking cash and marketable securities up to $4.2 billion, record levels. CEO Scott McGregor described a tough business environment and said that the company was keeping a tight rein on expenses with R&D and general overhead down by $21 million on last quarter.

In the all-important wireless sector Broadcom preferred to compare its numbers with the immediate past quarter, saying it was 16% higher based on wireless connectivity and cellular baseband sales with significant growth in 3G shipments, to Samsung in particular. Broadcom pushes the idea of 3G baseband integrated with application processors for Android, and says this business is strong, as it leads to affordable smartphones. The company has yet to enter the 4G LTE space

A year ago Broadcom bought Beceem Communications for $316 million planning to get into multimode LTE WiMAX handsets, but has so far failed to bring out a product on the back of it.

McGregor said that its set top business was stable but that broadband modem sales were soft with DOCSIS 3.0 up and DSL down and once again the company mentioned its full band capture technology which it thinks will get it into satellite TV and help it take a bigger share of cable tuner chips. He also said that revenue at Broadband Communications will be even further down once its decision to get out of DTV and Blu-ray products filters through.

Also within Wireless are WiFi and Bluetooth devices and customers are now launching Bluetooth 4.0 chips in smartphones, PC and desktops with Broadcom parts, supporting Bluetooth low energy, which the company says will also open up the deployment of sensor-based products, such as health and fitness monitors and security proximity devices.

During the quarter, Broadcom unveiled a new family of NFC chips designed to drive to mass deployment of NFC in consumer electronics devices, being manufactured in 40 nanometers, reducing power consumption by 90%. Broadcom said it is committed to making NFC as ubiquitous as Bluetooth and Wi-Fi are today.