Broadcom Reports Fourth Quarter and Year 2006 Results

IRVINE, Calif. — Broadcom Corporation (Nasdaq: BRCM) today reported unaudited financial results for its fourth quarter and year ended December 31, 2006.

Net revenue for the fourth quarter of 2006 was $923.5 million, an increase of 2.3% from the $902.6 million reported for the third quarter of 2006 and an increase of 12.5% from the $820.6 million reported for the fourth quarter of 2005. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the fourth quarter of 2006 was $45.1 million, or $.08 per share (diluted), compared with GAAP net income of $110.2 million, or $.19 per share (diluted), for the third quarter of 2006, and GAAP net income of $186.7 million, or $.32 per share (diluted), for the fourth quarter of 2005. The 2006 results also reflect the company’s adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”), effective January 1, 2006. Had the company applied the provisions of SFAS 123R in 2005, it would have recorded an additional $90.1 million in stock-based compensation expense and reported GAAP net income of $96.6 million, or $.17 per share (diluted), for the fourth quarter of 2005.

GAAP net income for the fourth quarter of 2006 is after $50.6 million of charges for payments Broadcom is making to or on behalf of certain current and former employees related to consequences of the company’s recent equity award review, as well as non-cash stock-based compensation expense incurred related to the extension of the post-service stock option exercise period for certain former employees.

Net revenue for the year ended December 31, 2006 was $3.67 billion, an increase of 37.3% from the $2.67 billion reported for the year ended December 31, 2005. GAAP net income for the year ended December 31, 2006 was $379.0 million, or $.64 per share (diluted), compared with GAAP net income of $367.1 million, or $.66 per share (diluted), for the year ended December 31, 2005. Had the company applied the provisions of SFAS 123R in 2005, it would have recorded an additional $461.9 million in stock-based compensation expense and reported a GAAP net loss of $94.8 million, or ($.19) per share (basic and diluted), for the year ended December 31, 2005.

In addition to GAAP results, Broadcom reports adjusted net income and net income per share, referred to respectively as “non-GAAP net income” and “non-GAAP net income per share.” A discussion of Broadcom’s use of these non-GAAP financial measures is set forth below, and reconciliations of GAAP net income to non-GAAP net income for the three months and years ended December 31, 2006 and 2005, respectively, appear in the financial statements portion of this release.

Non-GAAP net income for the fourth quarter of 2006, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $184.9 million, or $.31 per share (diluted), compared with non-GAAP net income of $191.4 million, or $.32 per share (diluted), for the third quarter of 2006, and $196.8 million, or $.34 per share (diluted), for the fourth quarter of 2005.

Non-GAAP net income for the year ended December 31, 2006, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $822.5 million, or $1.35 per share (diluted), compared with non-GAAP net income of $548.6 million, or $.98 per share (diluted), for the year ended December 31, 2005.

The company’s cash, cash equivalents and marketable securities at December 31, 2006 totaled a record $2.8 billion, an increase of $247.2 million over the comparable balance at September 30, 2006, and an increase of $926.1 million over the comparable balance at December 31, 2005.

“The year 2006 exemplified the ever-changing nature of the semiconductor industry, as strength in the first half of the year was followed by a slowdown in the second. However, on the whole, 2006 turned out to be a very good year for Broadcom as we increased our revenue by 37% and increased our cash and marketable securities by more than $900 million,” said Scott A. McGregor, Broadcom’s President and Chief Executive Officer. “Our continued focus on hiring the world’s best talent, combined with our execution in bringing new products to market and expanding into new end markets, enabled Broadcom’s revenue growth to outpace the overall semiconductor industry four fold in 2006.”

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