Broadcom Corp.’s (BRCM - Analyst Report) GAAP net income in fourth quarter 2014 more than doubled to $390 million or 64 cents per share from $168 million or 29 cents per share in the year-ago quarter. The year-over-year increase in earnings was largely driven by higher revenues and lower operating expenses.

Net income for full year 2014 was $652 million or $1.08 per share compared with $424 million or 73 cents per share in 2013.

Non-GAAP net income for the reported quarter stood at $463 million or 76 cents per share compared with $247 million or 43 cents per share in the year-earlier quarter. The adjusted earnings beat the Zacks Consensus Estimate of 70 cents per share.
 

Non-GAAP net income for full-year 2014 stood at $1.411 billion or $2.35 per share compared with $1.138 billion or $1.95 per share in 2013. The adjusted earnings beat the Zacks Consensus Estimate of $2.23 per share.

Revenues

Revenues for the reported quarter were $2.143 billion, up 3.8% year over year. The quarterly revenues exceeded the Zacks Consensus Estimate of $2.115 billion. The increase in revenues was driven by stronger Broadband and Connectivity revenue in the high-end smartphone and broadband access market. Revenues for full year 2014 were $8.43 billion, up 1.5% year over year.

In accordance with the restructuring initiatives, Broadcom presently has two reportable segments: Broadband and Connectivity, and Infrastructure and Networking. Revenues from Broadband and Connectivity segment stood at $1.475 billion .Revenues from Infrastructure and Networking stood at $625 million.

Margins

GAAP margin for the reported quarter improved to 52.8% from 50.3% in the prior-year quarter. GAAP gross margin for full year 2014 increased to 51.4% from 50.8% in 2013.

Balance Sheet & Cash Flow

Broadcom generated $1.925 billion in cash from operations for the year ended Dec 31, 2014 compared with $1.785 billion in the prior-year period. The company ended the year with cash and cash equivalents of $2.545 billion compared to $1.657 billion as of Dec 31, 2013. Long-term debt stood at $1.593 billion as of Dec 31, 2014 compared to $1.394 billion as of Dec, 31, 2013.

Broadcom increased its quarterly cash dividend to 14 cents per share from 12 cents. The cash dividend will be paid on Mar 2, 2015 to shareholders of record as on Feb 13.

Guidance

Concurrent with the earnings release, management provided its guidance for first quarter 2015. Total revenue is expected to be approximately $2.0 billion, up/down $75 million. Product gross margin on a GAAP basis is expected to be 52.8%, up/down 75 basis points. R&D and selling, general, and administrative expenses (GAAP) are expected to be up $5 million to up $25 million.

Broadcom continues to diversify into new markets such as Internet of Things, automotive, wearables and small cells. In the Internet of Things market, design activity remains high with its current products and the company is in the process of refreshing its portfolio with meaningful products that are optimized specifically for different market segments.

Broadcom currently has a Zacks Rank #1 (Strong Buy). Other stocks that look promising and are worth a look include Nitto Denko Corporation (NDEKY) carrying a Zacks Rank #1 (Strong Buy), and DSP Group Inc (DSPG - Snapshot Report) and AXT Inc. (AXTI - Snapshot Report), both carrying a Zacks Rank #2 (Buy).