Broadcom to acquire Teknovus, posts Q4 profit
IRVINE, Calif. (AP) – Chip-maker Broadcom Corp. said Wednesday it had agreed to acquire Teknovus, a chipset and software provider that enables broadband Internet services over fiber-optic cables, for $123 million in cash.
Broadcom said it expects the purchase to occur by June. The transaction remains subject to regulatory approval and other closing conditions. It said it expects the purchase to be neutral to earnings per share in 2010.
The type of technology Teknovus provides accounts for 94 percent of fiber-optic cable connections to homes in the Asia-Pacific region, the company said.
Meanwhile, Broadcom posted a $59.2 million net profit in the fourth quarter, reversing a loss. The improvement came despite a large charge to settle a stock-option backdating case against the company.
Net income for the three months to Dec. 31 came to 11 cents per share, despite the $160.5 million charge, which reduced earnings by 31 cents per share.
The proposed settlement remains subject to approval by a U.S. District Court in California and other conditions.
The quarterly profit reversed a loss of $159.2 million, or 32 cents per share, a year ago.
Revenue grew 19 percent to $1.34 billion, up from $1.13 billion a year earlier.
On an adjusted basis, the company said it made 49 cents per share in the quarter, beating the forecast of analysts polled by Thomson Reuters of 44 cents. Analysts had also forecast $1.32 billion in revenue.
Shares fell 39 cents, or 1.4 percent, to $27.50 in after-hours trading Wednesday, after closing down 14 cents at $27.89.
For the first quarter, the company said it expected revenue to be flat or rise up to 5 percent compared with the fourth quarter, implying a range between $1.34 billion and $1.41 billion. Analysts had been looking for first-quarter revenue of $1.24 billion.
For the full year, net income was $65.3 million, or 13 cents per share, a 70 percent drop from 2008 when the company posted net income of $214.8 million, or 41 cents per share. Annual revenue fell 4 percent to $4.49 billion.
Backdating involves retroactively setting a stock option's exercise price to a low point in the stock's value, boosting the value to recipients such as executives when the shares are sold.
It is legal when properly accounted for, but if not properly disclosed, it can allow companies to overstate profits and underpay taxes.
Broadcom was ultimately forced to write down $2.2 billion in profits after its actions were uncovered. Hundreds of other companies have been forced to make similar adjustments or pay fines to the Securities and Exchange Commission since authorities began investigating the practice in 2006.