Broadcom cuts more than 500 jobs

SAN FRANCISCO: Communications chip maker Broadcom Corp. laid off more than 500 employees, or at least 16 per cent of its work force, as part of a previously announced plan to cut

costs and return to profitability.

Some of the layoffs came this week and others will come next week, said Bill Ruehle, chief financial officer. He declined to say exactly how many jobs were cut, but said the company had 3,067 workers at the end of September.

"We're being careful on travel expenses, trade show expenses, everything from subscriptions to hotel rooms to food in the cafeteria," he said in an interview. "Any place we can save some money, we will save some money." The Irvine, California-based company also has consolidated some of its business units, but is not eliminating any products, Ruehle said.

He refused to specify which product groups were affected, except to say "areas where the market has been soft -- telecom, phone companies, long-haul has been very slow."

Last month, Broadcom said it would eliminate some jobs and cut capital spending in order to try to reduce operating expenses by 10 percent to 12 percent by the start of the first quarter of 2003. Operating expenses were just over $160 million in the third quarter, Ruehle said.

The company has said it expects fourth-quarter revenue to be about the same as the $290 million posted in the third quarter. Broadcom has not given a projection for the first quarter, but Ruehle said that the company could post a profit, before charges, if revenue exceeds $290 million that quarter.

Wall Street was predicting the company would post a fourth-quarter loss of 3 cents a share and a first-quarter profit of 1 cent a share, both before charges, according to Thomson First Call. Broadcom's chips, the brains of a computer, are used in digital TV set-top boxes, servers, cable modems and networking gear.

Shares in Broadcom closed at $20.64, up 69 cents, or 3.5 percent, on the Nasdaq stock exchange. They were trading at $20.75 in after-hours trade on Instinet.

© Reuters