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Avago Announces Q1

SAN JOSE, Calif. & SINGAPORE — Avago Technologies Limited (Nasdaq: AVGO), a leading supplier of analog interface components for communications, industrial and consumer applications, today reported financial results for its first quarter fiscal year 2011, ended January 30, 2011, and provided guidance for the second quarter of fiscal year 2011.

First Quarter Fiscal Year 2011 GAAP Results
Net revenue was $550 million, a decrease of 4 percent compared with the previous quarter, and up 21 percent from the same quarter last year.

Gross margin was $271 million, or 49.3 percent of net revenue. This compares with gross margin of $276 million, or 48.3 percent of net revenue last quarter, and gross margin of $194 million, or 42.5 percent of net revenue in the same quarter last year.

Operating expenses were $129 million. This compares with $131 million in the prior quarter and $116 million in the same quarter the previous year.

Income from operations was $142 million. This compares with $145 million in the prior quarter and $78 million in the same quarter last year.

First quarter net income was $119 million, or $0.48 per diluted share. This compares with net income of $164 million, or $0.66 per diluted share last quarter, and a net income of $38 million, or $0.16 per diluted share in the same quarter last year.

The Company’s cash and cash equivalents balance at the end of the first quarter was $363 million, compared to $561 million at the end of the prior quarter. The decrease over the previous quarter is primarily due to $230 million in principal and $28 million in interest and call premium used to redeem the Company’s outstanding senior subordinated debt in December 2010.

In addition, on December 30, 2010 the Company paid an interim cash dividend of 7 cents ($0.07) per ordinary share, totaling approximately $17 million.

First Quarter Fiscal Year 2011 Non-GAAP Results
Gross margin was $286 million, or 52.0 percent of net revenue. This compares with gross margin of $291 million, or 50.9 percent of net revenue last quarter, and gross margin of $209 million, or 45.8 percent of net revenue in the same quarter last year.

Income from operations was $169 million. This compares with $171 million in the prior quarter and $104 million in the same quarter the previous year.

Net income was $165 million, or $0.65 per diluted share. This compares with net income of $190 million, or $0.76 per diluted share last quarter, and net income of $88 million, or $0.36 per diluted share in the same quarter last year.

“Notwithstanding inventory adjustments in sales channels and the return of seasonality this quarter, we were able to grow revenue 21 percent year-on-year,” said Hock Tan, President and CEO of Avago Technologies Limited. “This growth was driven by a trend of increasing sales of proprietary products, which drove an improvement in gross margin to 52.0 percent.”

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