January 23, 2003 1:37 PM PST
Broadcom CEO Nicholas quits
Nicholas, known for his bold predictions for the communications market in general, and Broadcom specifically, said he was resigning, effective Thursday, to take "much-needed time off to attend to serious family matters." On a conference call with analysts, Nicholas said the departure was related to his recent separation and pending divorce.
Alan E. "Lanny" Ross, a Broadcom board member who has been acting as chief operating officer since November, is assuming Nicholas' responsibilities while the Irvine, Calif.-based company looks for a new permanent CEO. Henry Samueli, who co-founded the company with Nicholas, will continue in his roles as co-chairman of the board and chief technical officer.
Nicholas said the company is doing well enough for him to step down. "We have successfully navigated the worst downturn in semiconductor history," he said. Broadcom is expected to return to profitability, before charges and other items, this quarter, he added.
Broadcom, which makes chips used in cable modems, set-top boxes and other devices, has been hard hit by the economic downturn as well as the sagging market for telecommunications gear.
On Thursday, Broadcom reported a loss of $1.76 billion, or $6.40 per share, on sales of $295.9 million. That figure, which includes a large write-down for the company's acquisitions, compares with a net loss of $329.6 million, or $1.27 per share, on revenue of $226.8 million in the same quarter a year earlier.
Excluding a host of charges and other items, the company posted a loss of $6.6 million, or 2 cents per share. That compares with a loss of 11 cents a share on a similar basis for the year-earlier quarter.
News of Nicholas' departure sent Broadcom shares tumbling in after-hours trading on Island ECN. Shares were trading at $15.81, off $1.80 from the stock's closing price of $17.61 on the Nasdaq composite index. The stock traded above $200 a share for much of 2000, but traded below $10 last October before recovering somewhat.
Before the market opened, Broadcom announced a number of other executive changes, including the appointment of four new business unit heads. The company also noted that two longtime executives--Martin Colombatto and Tim Lindenfelser--are on leaves of absence.
Broadcom started life in 1991 as a networking company and quickly branched into the set-top and cable modem chip markets, where it became a leader.
The company had a blockbuster initial public offering in 1998, and the subsequent stock rise landed Nicholas and Samueli atop the list of America's richest individuals. In 1999 and 2000, the company went on an acquisition spree, purchasing more than a dozen companies and expanding into a host of areas such as home networking, digital video recording, cell phones and security chips. During that time, the company was also part of a high-profile legal battle with Intel over various patent issues.
Signs of a change in fortunes cropped up in early 2001 as Nicholas cut the company's earnings outlook while speaking at an investor conference in San Francisco. More recently, the company has trimmed jobs as it tries to deal with the downturn.
Nicholas, who ranked No. 149 on Forbes magazine's 2002 rankings of richest Americans, with an esimated wealth of $1.3 billion, is also known for his interests outside of the semiconductor industry. He was widely reported to have expressed interest in purchasing the Anaheim Angels and was a backer for the Gotcha Glacier, an indoor snowboarding project that was planned for Orange County; however, the company backing the $150 million snowboarding venture filed for bankruptcy in December, according to the Orange County Register.
Nicholas, who has been the company's co-chairman, is remaining on the board of directors, but said he will not seek re-election. In an interview, Nicholas said he is also retaining his substantial stake in the company.
Nicholas said he didn't want to pass up a chance at saving his marriage.
"My heart is always going to be here," Nicholas said of Broadcom. But "it's not going to be my No. 1 priority."