Advertisement
News
Advertisement

When the chips go down

Tue, 03/06/2001 - 7:00pm
Karen Kessler-Tanaka

First, the market goes soft. Next, your stock gets pounded down because the market's soft. Then, the lawsuits hit.

That's what the Broadcom executive team woke up to this morning, after they updated their financial outlook for the first quarter of 2001.

Blaming widespread economic slowness resulting in order delays, Broadcom President and CEO Henry Nicholas III announced that the company's first quarter revenue will slip to between $315 million and $325 million, or earnings per share in the range of 8 cents to 9 cents.

Yesterday, the company was slapped with a class-action lawsuit, filed on behalf of shareholders who bought Broadcom stock between October 18, 2000 and February 27, 2001, alleging securities fraud.

In the suit, Broadcom is charged with improperly accounting for millions of dollars of warrants it provided to customers who purchased Broadcom product. In particular, it is charged that Broadcom's 2000 third quarter financial statements improperly failed to reduce net revenues by the amount of those warrants. In addition, Broadcom's top officers are charged with selling more than $80 million worth of common stock prior to the revelations about the warrants for products deals.

Broadcom addressed the warrant issue when it issued its new economic forecast, and although the company did not address the lawsuit specifically, it said the economic slowdown may have an impact on the way certain warrants have been accounted for. Broadcom says it has been working with its outside auditor and the Securities and Exchange Commission to determine the appropriate accounting method.

Advertisement

Share This Story

X
You may login with either your assigned username or your e-mail address.
The password field is case sensitive.
Loading