UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-23993

Broadcom Corporation

(Exact Name of Registrant as Specified in Its Charter)

California		33-0480482
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

5300 California Avenue
Irvine, California 92617-3038
(Address of Principal Executive Offices) (Zip Code)

(949) 926-5000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of March 31, 2010 the registrant had 440.7 million shares of Class A common stock, $0.0001 par value, and 55.7 million shares of Class B common stock, $0.0001 par value, outstanding.

 

 

BROADCOM CORPORATION

QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2010
TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION			2
Item 1. Financial Statements			2
Unaudited Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009			2
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009			3
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009			4
Notes to Unaudited Condensed Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			30
Item 3. Quantitative and Qualitative Disclosures about Market Risk			52
Item 4. Controls and Procedures			52
PART II. OTHER INFORMATION			53
Item 1. Legal Proceedings			53
Item 1A. Risk Factors			53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			74
Item 3. Defaults upon Senior Securities			74
Item 4. (Removed and Reserved)			74
Item 5. Other Information			74
Item 6. Exhibits			75
EX-10.1
EX-31
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

     Broadcom® and the pulse logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Any other trademarks or trade names mentioned are the property of their respective owners.

© 2010 Broadcom Corporation. All rights reserved.

PART I. FINANCIAL INFORMATION

Item 1.		Financial Statements

BROADCOM CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31,				December 31,
		2010				2009
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	1,507,909			$	1,397,093
Short-term marketable securities			536,198				532,281
Accounts receivable, net			607,186				508,627
Inventory			403,439				362,428
Prepaid expenses and other current assets			107,284				113,903
Total current assets			3,162,016				2,914,332
Property and equipment, net			227,586				229,317
Long-term marketable securities			310,919				438,616
Goodwill			1,372,666				1,329,614
Purchased intangible assets, net			216,968				150,927
Other assets			63,851				64,436
Total assets		$	5,354,006			$	5,127,242
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	479,216			$	437,353
Wages and related benefits			148,223				190,315
Deferred revenue and income			77,864				87,388
Accrued liabilities			467,853				433,294
Total current liabilities			1,173,156				1,148,350
Long-term deferred revenue			606				608
Other long-term liabilities			85,754				86,438
Commitments and contingencies
Shareholders’ equity:
Common stock			50				50
Additional paid-in capital			11,138,719				11,153,060
Accumulated deficit			(7,048,905	)			(7,259,069	)
Accumulated other comprehensive income (loss)			4,626				(2,195	)
Total shareholders’ equity			4,094,490				3,891,846
Total liabilities and shareholders’ equity		$	5,354,006			$	5,127,242

See accompanying notes.

BROADCOM CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended
		March 31,
		2010				2009
		(In thousands, except per share data)
Net revenue:
Product revenue		$	1,404,344			$	828,230
Income from Qualcomm Agreement			51,674				—
Licensing revenue			6,281				25,206
Total net revenue			1,462,299				853,436
Costs and expenses:
Cost of product revenue			695,322				446,277
Research and development			420,844				372,724
Selling, general and administrative			132,908				125,048
Amortization of purchased intangible assets			2,647				4,159
Restructuring costs, net			430				7,111
Settlement costs, net			2,816				1,150
Total operating costs and expenses			1,254,967				956,469
Income (loss) from operations			207,332				(103,033	)
Interest income, net			2,314				4,398
Other income, net			2,858				1,646
Income (loss) before income taxes			212,504				(96,989	)
Provision (benefit) for income taxes			2,340				(5,049	)
Net income (loss)		$	210,164			$	(91,940	)
Net income (loss) per share (basic)		$	0.42			$	(0.19	)
Net income (loss) per share (diluted)		$	0.40			$	(0.19	)
Weighted average shares (basic)			495,359				490,195
Weighted average shares (diluted)			526,967				490,195
Dividends per share		$	0.08			$	—

     The following table presents details of total stock-based compensation expense included in each functional line item in the unaudited condensed consolidated statements of operations above:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Cost of product revenue		$	6,515			$	5,877
Research and development			89,043				89,262
Selling, general and administrative			31,083				28,634

See accompanying notes.

BROADCOM CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Operating activities
Net income (loss)		$	210,164			$	(91,940	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			19,973				21,749
Stock-based compensation expense:
Stock options and other awards			35,416				46,744
Restricted stock units			91,225				77,029
Amortization of purchased intangible assets			9,866				8,272
Non-cash restructuring charges			—				2,663
Gain on sale of marketable securities			—				(1,046	)
Changes in operating assets and liabilities:
Accounts receivable			(94,267	)			17,446
Inventory			(33,762	)			101,260
Prepaid expenses and other assets			13,190				(1,467	)
Accounts payable			44,191				(76,616	)
Deferred revenue and income			(9,526	)			379
Accrued settlement costs			(893	)			—
Other accrued and long-term liabilities			(17,761	)			(13,763	)
Net cash provided by operating activities			267,816				90,710
Investing activities
Net purchases of property and equipment			(18,153	)			(12,457	)
Net cash received from (paid for) acquired companies			(102,482	)			2,139
Purchases of strategic investments			(5,000	)			—
Purchases of marketable securities			(65,186	)			(109,706	)
Proceeds from sales and maturities of marketable securities			189,415				134,112
Net cash provided by (used in) investing activities			(1,406	)			14,088
Financing activities
Repurchases of Class A common stock			(153,952	)			—
Dividends paid			(39,637	)			—
Payment of assumed debt			(14,560	)			—
Proceeds from issuance of common stock			82,157				4,805
Minimum tax withholding paid on behalf of employees for restricted stock units			(29,602	)			(16,076	)
Net cash used in financing activities			(155,594	)			(11,271	)
Increase in cash and cash equivalents			110,816				93,527
Cash and cash equivalents at beginning of period			1,397,093				1,190,645
Cash and cash equivalents at end of period		$	1,507,909			$	1,284,172

See accompanying notes.

BROADCOM CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010

1. Summary of Significant Accounting Policies

Our Company

     Broadcom Corporation (including our subsidiaries, referred to collectively in this Report as “Broadcom,” “we,” “our” and “us”) is a major technology innovator and global leader in semiconductors for wired and wireless communications. Our system-on-a-chip (SoC) and software solutions enable the delivery of voice, video, data and rich multimedia content to mobile devices, consumer electronics (CE) devices in the home and business networking products for the workplace, data centers, service providers and carriers. We provide the industry’s broadest portfolio of cutting-edge SoC solutions to manufacturers of computing and networking equipment, CE and broadband access products, and mobile devices.

Basis of Presentation

     The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and with the instructions to Securities and Exchange Commission, or SEC, Form 10-Q and Article 10 of SEC Regulation S-X. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2009, included in our Annual Report on Form 10-K filed with the SEC February 3, 2010.

     The interim unaudited condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly our consolidated financial position at March 31, 2010 and December 31, 2009, and our consolidated results of operations and cash flows for the three months ended March 31, 2010 and 2009. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for future quarters or the full year.

     Certain prior period amounts in the unaudited condensed consolidated statements of operations have been reclassified to conform with the current period presentation of the separate display of product revenue, income from the Qualcomm agreement and licensing revenue as described below.

     We have evaluated subsequent events through the date of issuance of the unaudited condensed consolidated financial statements. During this period we did not have any material subsequent events.

Use of Estimates

     The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of total net revenue and expenses in the reporting periods. We regularly evaluate estimates and assumptions related to revenue recognition, rebates, allowances for doubtful accounts, sales returns and allowances, warranty reserves, inventory reserves, stock-based compensation expense, goodwill and purchased intangible asset valuations, strategic investments, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, self-insurance, restructuring costs (reversals), litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results we experience may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and actual results, our future results of operations will be affected.

Revenue Recognition

     Our product revenue consists principally of sales of semiconductor devices and, to a lesser extent, software licenses and royalties, development, support and maintenance agreements, data services and cancellation fees. The majority of our product sales occur through the efforts of our direct sales force. The remaining balance of product sales occurs through distributors. Our licensing revenue and income from the Qualcomm Agreement is generated from the licensing of intellectual property. See Note 2 for a summary of the composition of our net revenue.

Product Revenue

     We recognize product revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price to the customer is fixed or determinable, and (iv) collection of the resulting receivable is reasonably assured. These criteria are usually met at the time of product shipment. However, we do not recognize revenue when any significant obligations remain. We record reductions of revenue for estimated product returns and pricing adjustments, such as competitive pricing programs and rebates, in the same period that the related revenue is recorded. The amount of these reductions is based on historical sales returns, analysis of credit memo data, specific criteria included in rebate agreements, and other factors known at the time. We accrue 100% of potential rebates at the time of sale and do not apply a breakage factor. We reverse the accrual for unclaimed rebate amounts as specific rebate programs contractually end or when we believe unclaimed rebates are no longer subject to payment and will not be paid. See Note 2 for a summary of our rebate activity.

     A portion of our product sales is made through distributors under agreements allowing for pricing credits and/or rights of return. These pricing credits and/or right of return provisions prevent us from being able to reasonably estimate the final price of the inventory to be sold and the amount of inventory that could be returned pursuant to these agreements. As a result, the criterion listed in (iii) in the paragraph above has not been met at the time we deliver products to our distributors. Accordingly, product revenue from sales made through these distributors is not recognized until the distributors ship the product to their customers. We also maintain inventory, or hubbing, arrangements with certain of our customers. Pursuant to these arrangements we deliver products to a customer or a designated third party warehouse based upon the customers’ projected needs, but do not recognize product revenue unless and until the customer reports that it has removed our product from the warehouse to be incorporated into its end products.

     Revenue from software licenses is recognized when all revenue recognition criteria are met and, if applicable, when vendor specific objective evidence, or VSOE, exists to allocate the total license fee to each element of multiple-element software arrangements, including post-contract customer support. Post-contract support is recognized ratably over the term of the related contract. When a contract contains multiple elements wherein the only undelivered element is post-contract customer support and VSOE of the fair value of post-contract customer support does not exist, revenue from the entire arrangement is recognized ratably over the support period. Software royalty revenue is recognized based upon reports received from licensees during the period, unless collectibility is not reasonably assured, in which case revenue is recognized when payment is received from the licensee. Revenue from cancellation fees is recognized when cash is received from the customer.

     In September 2009 the Financial Accounting Standards Board, or FASB, reached a consensus on Accounting Standards Update, or ASU, 2009-13, Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements, or ASU 2009-13 and ASU 2009-14, Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements, or ASU 2009-14. ASU 2009-13 modifies the requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. ASU 2009-13 establishes a selling price hierarchy that allows for the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple element arrangement where neither VSOE nor third-party evidence, or TPE, is available for that deliverable. In the absence of VSOE or TPE of the standalone selling price for one or more delivered or undelivered elements in a multiple-element arrangement, entities are required to estimate the selling prices of those elements. Overall arrangement consideration is allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or TPE or are based on the entity’s estimated selling price. The residual method of allocating arrangement consideration has been eliminated. ASU

2009-14 modifies the software revenue recognition guidance to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. We adopted the provisions of these ASUs effective January 1, 2010 and they did not have a material impact on our results of operations.

Income from the Qualcomm Agreement

     On April 26, 2009 we entered into a four-year Settlement and Patent License and Non-Assert Agreement, or the Qualcomm Agreement, with QUALCOMM Incorporated, or Qualcomm. The Qualcomm Agreement is a multiple element arrangement which includes: (i) an exchange of intellectual property rights, including in certain circumstances, by a series of covenants not to assert claims of patent infringement under future patents issued within one to four years of the execution date of the agreement, (ii) the assignment of certain existing patents by Broadcom to Qualcomm with Broadcom retaining a royalty-free license under these patents, and (iii) the settlement of all outstanding litigation and claims between us and Qualcomm. The proceeds of the Qualcomm Agreement were allocated amongst the principal elements of the transaction. A gain from the settlement of litigation was immediately recognized that approximates the value of awards determined by the United States District Court for the Central District of California. The remaining consideration was predominantly associated with the transfer of current and future intellectual property rights, as well as the settlement of all other outstanding litigation, and is being recognized within net revenue over the performance period of four years as a single unit of accounting. However this income will be limited to the lesser of the cumulative straight-line amortization over the four year performance period or the cumulative cash proceeds received.

Licensing of Intellectual Property

     Revenue and related income from the licensing of intellectual property is recognized based upon either the performance period of the license or upon receipt of licensee reports as applicable in our various intellectual property arrangements.

Deferred Revenue and Income

     We defer revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. Deferred revenue and income do not include amounts from products delivered to distributors that the distributors have not yet sold through to their end customers.

Stock-Based Compensation

     Broadcom has in effect stock incentive plans under which incentive stock options have been granted to employees and restricted stock units and non-qualified stock options have been granted to employees and non-employee members of the Board of Directors. We also have an employee stock purchase plan for all eligible employees. We are required to estimate the fair value of share-based awards on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. The fair value of our restricted stock units is based on the closing market price of our Class A common stock on the date of grant less our expected dividend yield. We have estimated the fair value of stock options and stock purchase rights as of the date of grant or assumption using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable. The Black-Scholes model considers, among other factors, the expected life of the award, the expected volatility of our stock price and the expected dividend yield. We evaluate the assumptions used to value stock options and stock purchase rights on a quarterly basis. The fair values generated by the Black-Scholes model may not be indicative of the actual fair values of our equity awards, as it does not consider other factors important to those awards to employees, such as continued employment, periodic vesting requirements and limited transferability.

Fair Value of Financial Instruments

     Our financial instruments consist principally of cash and cash equivalents, short- and long-term marketable securities, accounts receivable and accounts payable. The fair value of substantially all our cash equivalents and marketable securities is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The fair value of commercial paper included in cash equivalents was determined based on “Level 2” inputs, which were derived based on quoted prices for identical or similar assets, which had few transactions near the measurement period. We believe that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Marketable Securities

     We maintain an investment portfolio of various security holdings, types and maturities. Broadcom defines marketable securities as income yielding securities that can be readily converted into cash. Examples of marketable securities include U.S. Treasury and agency obligations, commercial paper, corporate notes and bonds, time deposits, foreign notes and certificates of deposit. We place our cash investments in instruments that meet credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument. It is our policy to invest in instruments that have a final maturity not to exceed three years and a portfolio weighted average maturity not to exceed 18 months. We do not use derivative financial instruments. All of our marketable securities are rated AA-/Aa3 or A-1/P-1 or above by the major credit rating agencies.

     We account for our investments in debt and equity instruments as available-for-sale. Management determines the appropriate classification of such securities at the time of purchase and re-evaluates such classification as of each balance sheet date. Cash equivalents and marketable securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of shareholders’ equity, net of tax. We assess whether our investments with unrealized loss positions are other than temporarily impaired. Unrealized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other income (expense), net in the unaudited condensed consolidated statements of operations.

Goodwill and Other Long-Lived Assets

     Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Other long-lived assets primarily represent purchased intangible assets including developed technology, customer relationships and in-process research and development, or IPR&D. We currently amortize our intangible assets with definitive lives over periods ranging from one to fifteen years using a method that reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up or, if that pattern cannot be reliably determined, using a straight-line amortization method. We capitalize IPR&D projects. On completion of each project, IPR&D assets will be amortized over their estimated useful lives. If any of the projects are abandoned, we would be required to impair the related IPR&D asset.

Guarantees and Indemnifications

     In some agreements to which we are a party, we have agreed to indemnify the other party for certain matters such as product liability. We include intellectual property indemnification provisions in our standard terms and conditions of sale for our products and have also included such provisions in certain agreements with third parties. We have and will continue to evaluate and provide reasonable assistance for these other parties. This may include certain levels of financial support to minimize the impact of the litigation in which they are involved. To date, there have been no known events or circumstances that have resulted in any material costs related to these indemnification provisions and no liabilities therefor have been recorded in the accompanying unaudited condensed consolidated financial statements. However, the maximum potential amount of the future payments we could be required to make under these indemnification obligations could be significant.

     We have obligations to indemnify certain of our present and former directors, officers and employees to the maximum extent not prohibited by law. Under these obligations, Broadcom is required (subject to certain exceptions) to indemnify each such director, officer and employee against expenses, including attorneys’ fees, judgments, fines and settlements, paid by such individual. The potential amount of the future payments we could be required to make under these indemnification obligations could be significant. We maintain directors’ and officers’ insurance policies that may generally limit our exposure and enable us to recover a portion of the amounts paid with respect to such obligations; however, we will not be able to effect any further recoveries under such policies with respect to currently pending litigation concerning our prior equity award practices.

Recent Accounting Pronouncements

     In January 2010 the FASB issued ASU 2009-16, Accounting for Transfers of Financial Assets (FASB Statement No. 166, Accounting for Transfers of Financial Assets), or ASU 2009-16, which eliminates the concept of a “qualifying special-purpose entity” (QSPE), revises conditions for reporting a transfer of a portion of a financial asset as a sale (e.g., loan participations), clarifies the derecognition criteria, eliminates special guidance for guaranteed mortgage securitizations, and changes the initial measurement of a transferor’s interest in transferred financial assets. ASU 2009-16 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2009. We adopted the provisions of this ASU effective January 1, 2010, which did not have a material impact on our financial statements.

     In January 2010 the FASB issued ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (FASB Statement No. 167, Amendments to FASB Interpretation No. 46 (R)), which revises analysis for identifying the primary beneficiary of a variable interest entity, or VIE, by replacing the previous quantitative-based analysis with a framework that is based more on qualitative judgments. The new guidance requires the primary beneficiary of a VIE to be identified as the party that both (i) has the power to direct the activities of a VIE that most significantly impact its economic performance and (ii) has an obligation to absorb losses or a right to receive benefits that could potentially be significant to the VIE. ASU 2009-17 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2009. We adopted the provisions of this ASU effective January 1, 2010, which did not have a material impact on our financial statements.

2. Supplemental Financial Information

Net Revenue

     The following table presents details of our product revenue:

		Three Months Ended
		March 31,
		2010				2009
Product sales made through direct sales force (1)			80.5	%			82.4	%
Product sales made through distributors			19.5				17.6
			100.0	%			100.0	%

     Income from the Qualcomm Agreement is expected to be recognized in the remainder of 2010 through 2013 as follows:

		2010				2011				2012				2013				Thereafter				Total
										(In thousands)
Income from Qualcomm Agreement		$	155,021			$	206,695			$	186,012			$	86,400			$	—			$	634,128

Inventory

     The following table presents details of our inventory:

		March 31,				December 31,
		2010				2009
		(In thousands)
Work in process		$	213,644			$	157,148
Finished goods			189,795				205,280
		$	403,439			$	362,428

Property and Equipment

     The following table presents details of our property and equipment:

				March 31,				December 31,
		Useful Life		2010				2009
		(In years)		(In thousands)
Leasehold improvements		1 to 10		$	163,387			$	163,302
Office furniture and equipment		3 to 7			26,672				26,382
Machinery and equipment		3 to 5			250,912				235,142
Computer software and equipment		2 to 4			126,767				122,213
Construction in progress		N/A			4,393				6,666
					572,131				553,705
Less accumulated depreciation and amortization					(344,545	)			(324,388	)
				$	227,586			$	229,317

Goodwill

     The following table summarizes the activity related to the carrying value of our goodwill:

		Reportable Segments
		Broadband				Mobile &				Enterprise
		Communications				Wireless				Networking				Consolidated
		(In thousands)
Goodwill		$	483,029			$	802,269			$	1,873,623			$	3,158,921
Accumulated impairment losses			—				(543,198	)			(1,286,109	)			(1,829,307	)
Goodwill at January 1, 2010		$	483,029			$	259,071			$	587,514			$	1,329,614
Goodwill acquired during the year			—				1,124				35,799				36,923
Goodwill at March 31, 2010		$	483,029			$	260,195			$	623,313			$	1,366,537
Effects of foreign currency translation															6,129
Goodwill at March 31, 2010														$	1,372,666

Purchased Intangible Assets

     The following table presents details of our purchased intangible assets:

		March 31, 2010												December 31, 2009
						Accumulated												Accumulated
		Gross				Amortization				Net				Gross				Amortization				Net
		(In thousands)
Developed technology		$	325,050			$	(214,726	)		$	110,324			$	278,297			$	(207,517	)		$	70,780
In-process research and development			61,460				—				61,460				50,860				—				50,860
Customer relationships			120,566				(81,297	)			39,269				107,366				(79,212	)			28,154
Customer backlog			5,736				(4,191	)			1,545				3,736				(3,736	)			—
Other			9,414				(8,186	)			1,228				9,214				(8,081	)			1,133
		$	522,226			$	(308,400	)		$	213,826			$	449,473			$	(298,546	)		$	150,927
Effects of foreign currency translation											3,142												—
										$	216,968											$	150,927

     The following table presents details of the amortization of purchased intangible assets included in the cost of product revenue and other operating expense categories:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Cost of product revenue		$	7,219			$	4,113
Other operating expenses			2,647				4,159
		$	9,866			$	8,272

     The following table presents details of the amortization of existing purchased intangible assets, including IPR&D, that is currently estimated to be expensed in the remainder of 2010 and thereafter:

		Purchased Intangible Asset Amortization by Year
		2010				2011				2012				2013				Thereafter				Total
		(In thousands)
Cost of product revenue		$	23,377			$	37,921			$	40,413			$	31,949			$	40,579			$	174,239
Other operating expenses			14,695				6,381				3,443				3,083				15,127				42,729
		$	38,072			$	44,302			$	43,856			$	35,032			$	55,706			$	216,968

Accrued Liabilities

     The following table presents details of our accrued liabilities:

		March 31,				December 31,
		2010				2009
		(In thousands)
Accrued rebates		$	194,574			$	162,212
Accrued settlement charges			175,814				176,707
Accrued legal costs			29,553				36,739
Accrued taxes			12,960				13,854
Warranty reserve			14,458				10,430
Restructuring liabilities			898				1,328
Other			39,596				32,024
		$	467,853			$	433,294

Other Long-Term Liabilities

     The following table presents details of our other long-term liabilities:

		March 31,				December 31,
		2010				2009
		(In thousands)
Deferred rent		$	33,319			$	32,931
Accrued taxes			23,747				24,919
Deferred tax liabilities			22,925				22,722
Other long-term liabilities			5,763				5,866
		$	85,754			$	86,438

Accrued Rebate Activity

     The following table summarizes the activity related to accrued rebates:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Beginning balance		$	162,212			$	125,058
Charged as a reduction of revenue			103,870				50,515
Reversal of unclaimed rebates			(1,829	)			(2,836	)
Payments			(69,679	)			(60,794	)
Ending balance		$	194,574			$	111,943

Warranty Reserve Activity

     The following table summarizes activity related to the warranty reserve:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Beginning balance		$	10,430			$	11,473
Charged to costs and expenses			4,610				1,054
Payments			(582	)			(912	)
Ending balance		$	14,458			$	11,615

Restructuring Activity

     The following table summarizes activity related to our current and long-term restructuring liabilities:

		Three Months Ended
		March 31, 2010
		(In thousands)
Beginning balance		$	1,328
Charged to expense			442
Reversal of restructuring costs			(12	)
Payments			(860	)
Ending balance		$	898

Computation of Net Income Per Share

     The following table presents the computation of net income per share:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands, except per share data)
Numerator: Net income (loss)		$	210,164			$	(91,940	)
Denominator: Weighted average shares outstanding			495,382				490,289
Less: Unvested common shares outstanding			(23	)			(94	)
Denominator for net income per share (basic)			495,359				490,195
Effect of dilutive securities:
Unvested common shares outstanding			11				—
Stock awards			31,597				—
Denominator for net income per share (diluted)			526,967				490,195
Net income (loss) per share (basic)		$	0.42			$	(0.19	)
Net income (loss) per share (diluted)		$	0.40			$	(0.19	)

     Net income per share (diluted) does not include the effect of anti-dilutive common share equivalents resulting from outstanding equity awards. There were 52.5 million and 126.3 million anti-dilutive common share equivalents in the three months ended March 31, 2010 and 2009, respectively.

Supplemental Cash Flow Information

     We paid $7.6 million in the three months ended March 31, 2010 related to capital equipment purchases that were accrued at December 31, 2009 and had billings of $4.3 million for capital equipment that were accrued but not yet paid as of March 31, 2010. In addition, at March 31, 2010 we had foreign currency translation adjustments of $9.3 million related to goodwill and purchased intangible assets. These amounts have been excluded from the unaudited condensed consolidated statements of cash flows.

3. Business Combinations

     In March 2010 we acquired Teknovus, Inc., a leading supplier of Ethernet Passive Optical Network chipsets and software, for $100.1 million, net of cash acquired. We also assumed $14.6 million of debt which was subsequently repaid in the three months ended March 31, 2010. We also made an additional acquisition in 2010 for $2.4 million. There were no equity awards assumed in these acquisitions. There were no acquisitions consummated in the three months ended March 31, 2009.

     A portion of the cash consideration in the above acquisitions is currently held in escrow pursuant to the terms of the acquisition agreements and is reflected in goodwill as we believe the likelihood of the escrow fund being utilized by us is remote.

     Our primary reason for the Teknovus acquisition was to enter into and expand our market share in the Enterprise Networking market, reduce the time required to develop new technologies and products and bring them to market, incorporate enhanced functionality into and complement our existing product offerings, augment our engineering workforce, and enhance our technological capabilities. The principal factor that resulted in recognition of goodwill was that the purchase price for each acquisition was based in part on cash flow projections assuming the integration of any acquired technology and products with our products, which is of considerably greater value than utilizing each acquired company’s technology or product on a standalone basis.

     We allocated the purchase price of each of these acquisitions to tangible assets, liabilities and identifiable intangible assets acquired, as well as IPR&D, if identified, based on their estimated fair values. The excess of each purchase price over the aggregate fair values was recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. Intangible assets, including IPR&D, are amortized using a method that reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up or, if that pattern cannot be reliably determined, using a straight-line amortization method.

     We calculated the fair value of the tangible and intangible assets acquired to allocate the purchase prices on the respective acquisition dates. Based upon those calculations, the purchase prices for the acquisitions were allocated as follows:

		2010
		Acquisitions
		(In thousands)
Fair Market Values
Cash and cash equivalents		$	9,196
Accounts receivable, net			4,292
Inventory			7,249
Prepaid and other current assets			863
Property and equipment, net			1,640
Other assets			70
Goodwill			36,923
Purchased intangible assets			72,753
Total assets acquired			132,986
Accounts payable			(970	)
Wages and related benefits			(1,308	)
Debt			(14,560	)
Accrued liabilities			(3,813	)
Long-term liabilities			(658	)
Total liabilities assumed			(21,309	)
Purchase price allocation		$	111,677

		Useful		2010
		Life		Acquisitions
		(In years)		(In thousands)
Purchased Intangible Assets:
Developed technology		2 - 10		$	46,753
In-process research and development		3 - 7			10,600
Customer relationships		2			13,200
Other		1 - 4			2,200
				$	72,753

Purchased Intangible Assets

     Developed technology represents core technology and completed technology. Core technology represents the fundamental technology that survives multiple product iterations and has passed technological feasibility. We generally use a relief-from-royalty method to value core technology, based on market royalties for similar fundamental technologies. The relief-from-royalty method estimates the cost savings that accrue to the owner of an intangible asset that would otherwise be payable as royalties or license fees on revenues earned through the use of the asset. The royalty rate used is based on an analysis of empirical, market-derived royalty rates for guideline intangible assets. Typically, revenue is projected over the expected remaining useful life of the completed technology. The market-derived royalty rate is then applied to estimate the royalty savings. Completed technology is specific to certain products acquired that have also passed technological feasibility. We generally use a multi-period excess earnings approach to value completed technology. The multi-period excess earnings approach calculates the value based on the risk adjusted present value of the cash flows specific to the products, allowing for a reasonable return.

     Customer relationships represent future projected revenue that will be derived from sales of future versions of existing products to existing customers of the acquired companies.

In-Process Research and Development

     In 2010 we capitalized $10.6 million of IPR&D costs primarily related to our acquisition of Teknovus. Upon completion of each project, the related IPR&D assets will be amortized over their estimated useful lives. If any of the projects are abandoned, we will be required to impair the related IPR&D asset.

     The fair value of the IPR&D for each of the acquisitions was determined using the income approach. Under the income approach, the expected future cash flows from each project under development are estimated and discounted to their net present values at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and return on assets, as well as the risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. Each project was analyzed to determine the unique technological innovations, the existence and reliance on core technology, the existence of any alternative future use or current technological feasibility, and the complexity, cost and time to complete the remaining development. Future cash flows for each project were estimated based on forecasted revenue and costs, taking into account the expected product life cycles, market penetration and growth rates.

     The following table summarizes the significant assumptions underlying the valuation of IPR&D at the acquisition date:

Weighted

Average

Average

Risk

Estimated

Estimated

Estimated

Adjusted

Percent

Time to

Cost to

Discount

Company Acquired

Development Projects

Complete

Complete

Complete

Rate

IPR&D

(In years)

(In millions)

(In millions)

Teknovus, Inc.

Ethernet Passive Optical Network (EPON) chipsets and software

11.2

%

0.9

$

19.3

25.9

%

$

10.6

     As of the acquisition date, certain ongoing development projects were in process. The assumptions consist primarily of expected completion dates for the IPR&D projects, estimated costs to complete the projects, and revenue and expense projections for the products once they have entered the market. Research and development costs to bring the products of the acquired companies to technological feasibility are not expected to have a material impact on our results of operations or financial condition. At March 31, 2010 all development projects from our Dune Networks, Inc. and Teknovus acquisitions were still in process. Actual results to date have been consistent, in all material respects, with our assumptions at the time of the acquisitions.

Supplemental Pro Forma Data (Unaudited)

     The unaudited pro forma statement of operations data below gives effect to the Dune Networks and Teknovus acquisitions that were completed in December 2009 and March 2010, respectively, as if they had occurred at the beginning of 2009. The following data includes the amortization of purchased intangible assets and stock-based compensation expense. This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisitions taken place at the beginning of 2009.

		Three Months Ended
		March 31,
		2010				2009
		(In thousands, except per share data)
Pro forma net revenue		$	1,468,542			$	866,215
Pro forma net income (loss)		$	202,835			$	(102,062	)
Pro forma net income (loss) per share (diluted)		$	0.38			$	(0.21	)

4. Cash, Cash Equivalents and Marketable Securities

     A summary of our cash, cash equivalents and short- and long-term marketable securities by major security type follows:

						Short-Term				Long-Term
		Cash and				Marketable				Marketable
		Cash Equivalents				Securities				Securities				Total
		(In thousands)
March 31, 2010
Cash		$	64,301			$	—			$	—			$	64,301
Time deposits			848,090				—				—				848,090
U.S. Treasury and agency money market funds			493,943				—				—				493,943
U.S. Treasury and agency obligations			—				518,896				301,766				820,662
Corporate bonds			—				17,302				9,153				26,455
Institutional money market funds			101,575				—				—				101,575
		$	1,507,909			$	536,198			$	310,919			$	2,355,026
December 31, 2009
Cash		$	74,044			$	—			$	—			$	74,044
Time deposits			571,959				—				—				571,959
U.S. Treasury and agency money market funds			515,930				—				—				515,930
U.S. Treasury and agency obligations			—				521,022				436,518				957,540
Commercial paper(1)			79,988				—				—				79,988
Corporate bonds			—				11,259				2,098				13,357
Institutional money market funds			155,172				—				—				155,172
		$	1,397,093			$	532,281			$	438,616			$	2,367,990

     The following table shows the gross unrealized gains and losses and fair values for those investments aggregated by major security type:

						Gross				Gross
						Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value
		(In thousands)
March 31, 2010
U.S. Treasury and agency obligations		$	818,869			$	1,859			$	(66	)		$	820,662
Corporate bonds			26,461				12				(18	)			26,455
		$	845,330			$	1,871			$	(84	)		$	847,117
December 31, 2009
U.S. Treasury and agency obligations		$	956,944			$	724			$	(128	)		$	957,540
Commercial paper			79,988				—				—				79,988
Corporate bonds			13,364				5				(12	)			13,357
		$	1,050,296			$	729			$	(140	)		$	1,050,885

     All of our long-term marketable securities had maturities of between one and two years in duration at March 31, 2010.

     As of March 31, 2010 we had 25 investments that were in an unrealized loss position of $0.1 million. The gross unrealized losses related to these investments were due to changes in interest rates. We have determined that the gross unrealized losses on these investments at March 31, 2010 are temporary in nature. We review our investments to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

5. Income Taxes

     We recorded a tax provision of $2.3 million and a tax benefit of $5.0 million in the three months ended March 31, 2010 and 2009, respectively. Our effective tax rates were 1.0% and 5.2% in the three months ended March 31, 2010 and 2009, respectively. The difference between our effective tax rates and the 35% federal statutory rate resulted primarily from foreign earnings taxed at rates lower than the federal statutory rate in the three months ended March 31, 2010 and 2009, domestic losses recorded without income tax benefit in the three months ended March 31, 2009, and $3.9 million of tax benefits in the three months ended March 31, 2010 resulting primarily from the March 22, 2010 decision in the U.S. Court of Appeals for the Ninth Circuit case concerning Xilinx (as discussed below) and $1.0 million of tax benefits in the three months ended March 31, 2009, resulting primarily from the expiration of the statutes of limitations for the assessment of taxes in various foreign jurisdictions. Additionally, we recorded a tax benefit of $3.9 million in the three months ended March 31, 2009 reflecting the utilization of a portion of our credits for increasing research activities (research and development tax credits) pursuant to a provision contained in the American Recovery and Reinvestment Act of 2009, which was enacted in February 2009.

     We utilize the asset and liability method of accounting for income taxes. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. Forming a conclusion that a valuation allowance is not required is difficult when there is negative evidence such as cumulative losses in recent years. As a result of our recent cumulative losses in the U.S. and certain foreign jurisdictions, and the full utilization of our loss carryback opportunities, we have concluded that a full valuation allowance should be recorded in such jurisdictions. In certain other foreign jurisdictions where we do not have cumulative losses, we had net deferred tax liabilities of $10.7 million and $11.2 million at March 31, 2010 and December 31, 2009, respectively.

     As previously disclosed, on May 27, 2009, the U.S. Court of Appeals for the Ninth Circuit in the case between Xilinx, Inc. and the Commissioner of Internal Revenue, overturned a 2005 U.S. Tax Court ruling regarding treatment of certain compensation expenses under a Company’s research and development cost-sharing arrangements with affiliates. The Court of Appeals held that related parties to such an arrangement must share stock-based compensation expenses, notwithstanding the fact that unrelated parties in such an arrangement would not share such costs. The case was subject to further appeal. As a result of this May 27, 2009 decision, we reduced our gross deferred tax assets for federal and state net operating loss carryforwards and capitalized research and development costs, increased in our deferred tax assets for certain tax credits, and increased our tax provision in 2009 by $3.2 million.

     On January 13, 2010, the U.S. Court of Appeals for the Ninth Circuit withdrew its May 27, 2009 ruling in the Xilinx case and subsequently issued a new decision in favor of Xilinx on March 22, 2010, thereby affirming the August 30, 2005 decision of the U.S. Tax Court. Consequently, during the quarter ended March 31, 2010, we reversed the amounts we had previously recorded in 2009 related to the court’s May 27, 2009 decision. As a result, in the quarter ended March 31, 2010, we reduced our tax provision by $3.2 million and adjusted certain of our gross deferred tax assets. Included in these adjustments was an increase in our federal and state net operating loss carryforwards of approximately $665 million and $455 million, respectively, an increase of federal and state capitalized research and development costs of approximately $10 million each, an increase in our deferred tax assets relating to stock-based compensation of approximately $65 million, and a decrease in certain tax credits of approximately $10 million. These changes in our gross deferred tax assets were fully offset by a valuation allowance adjustment, and therefore did not result in any change in our net deferred tax assets or our income tax expense for the three months ended March 31, 2010. In addition to the adjustments related to the March 22, 2010 Xilinx decision, in the three months ended March 31, 2010, we reduced our federal and state net operating losses by approximately $60 million for adjustments to our intercompany charges to foreign affiliates for the years ended 2001 to 2009. This reduction to our net operating losses is fully offset by a corresponding adjustment to the valuation allowance for deferred tax assets resulting in no net change to net deferred tax assets in our unaudited condensed consolidated balance sheet and no adjustment to our income tax expense.

     We file federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2004 through 2009 tax years generally remain subject to examination by federal and most state tax authorities. In foreign jurisdictions, the 2002 through 2009 tax years generally remain subject to examination by tax authorities.

     Our income tax returns for the 2004, 2005 and 2006 tax years and our employment tax returns for the 2003, 2004, 2005 and 2006 tax years are currently under examination by the Internal Revenue Service. We do not expect that the results of these examinations will have a material effect on our financial condition or results of operations. In March 2010, a Notice of Proposed Adjustment, or NOPA, was received relating to the IRS examination of our 2004, 2005 and 2006 income tax returns. The NOPA primarily relates to cost-sharing methodologies of stock based compensation, as well as other cost-sharing related issues. In light of the Ninth Circuit Xilinx decision, we believe the stock based compensation matters identified in the NOPA and the settlement of the remaining proposed adjustments will not result in a material adverse financial impact on our results of operations.

     We operate under tax holidays in Singapore, which are effective through March 31, 2014. The tax holidays are conditional upon our continued compliance in meeting certain employment and investment thresholds.

     The research and development tax credit provisions of the Emergency Economic Stabilization Act of 2008 expired December 31, 2009 and were not extended as of March 31, 2010. As of March 31, 2010 our federal and state research and development tax credits totaled $838.2 million, which is subject to a full valuation allowance.

6. Shareholders’ Equity

Share Repurchase Programs

     From time to time our Board of Directors has authorized various programs to repurchase shares of our Class A common stock depending on market conditions and other factors. We repurchased a total of 5.2 million shares of our Class A common stock at a weighted average price of $29.75 per share in the three months ended March 31,

2010 under the program we announced in July 2008. This program to repurchase shares with an aggregate value of up to $1.0 billion was completed in March 2010, at which time we had repurchased 47.6 million shares of Class A common stock at a weighted average price of $21.01 per share under the program.

     In February 2010 we announced that our Board of Directors had authorized an evergreen share repurchase program intended to offset dilution associated with our stock incentive plans. The maximum number of shares of our Class A common stock that may be repurchased in any one year is equal to the total number of shares issued pursuant to our equity awards in the previous year and the current year. Purchases may be made in both the open market and through negotiated transactions. The share repurchase program does not have an expiration date and may be suspended at any time at the discretion of the Board of Directors. This program may also be complemented with an additional share repurchase program in the future. There have been no repurchases to date under this program.

     Repurchases under our share repurchase programs were and are intended to be made in open market or privately negotiated transactions in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Quarterly Dividend

     In January 2010 our Board of Directors adopted a dividend policy pursuant to which we intend to pay quarterly cash dividends on our common stock. We declared the first quarterly cash dividend of $0.08 per common share payable to holders of our common stock. The dividend was paid March 8, 2010 to holders of our Class A and Class B common stock of record at the close of business February 19, 2010 and totaled $39.6 million.

Comprehensive Income

     The components of comprehensive income (loss), net of taxes, are as follows:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Net income (loss)		$	210,164			$	(91,940	)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax			1,198				(2,764	)
Translation adjustments			5,623				1,099
Total comprehensive income (loss)		$	216,985			$	(93,605	)

7. Employee Benefit Plans

Combined Incentive Plan Activity

     Activity under all stock option incentive plans in the three months ended March 31, 2010 is set forth below:

		Options Outstanding
										Weighted				Weighted
										Average				Average
						Exercise				Exercise				Grant-Date
		Number of				Price Range				Price				Fair Value
		Shares				per Share				per Share				per Share
		(In thousands)
Balance at December 31, 2009			113,406			$	.01 - 81.50			$	25.71			$	15.71
Options granted			2,668				29.39 - 31.82				29.46				9.39
Options cancelled			(422	)			.01 - 45.94				34.39				15.95
Options exercised			(4,015	)			.01 - 32.98				20.52				22.35
Balance at March 31, 2010			111,637			$	.01 - 81.50			$	25.95			$	15.32

     Restricted stock unit activity in the three months ended March 31, 2010 is set forth below:

		Restricted Stock Units
		Outstanding
						Weighted
						Average
						Grant-Date
		Number of				Fair Value
		Shares				per Share
		(In thousands)
Balance at December 31, 2009			28,693			$	25.58
Restricted stock units granted			9,657				28.91
Restricted stock units cancelled			(303	)			25.29
Restricted stock units vested			(2,974	)			28.52
Balance at March 31, 2010			35,073			$	26.25

     In February 2010, as part of Broadcom’s regular annual equity compensation review program, our Compensation Committee granted 10.1 million shares subject to equity awards, which included 2.2 million shares under employee stock options and 7.9 million restricted stock units. The amount of unearned stock-based compensation associated with these awards is $247.6 million and is estimated to be expensed from 2010 through 2014.

     The per share fair values of stock options and employee stock purchase rights granted in the three months ended March 31, 2010 in connection with stock incentive plans and rights granted in connection with the employee stock purchase plan have been estimated with the following weighted average assumptions:

						Employee
		Employee				Stock
		Stock				Purchase
		Options				Rights
Expected life (in years)			4.50				0.62
Volatility			0.39				0.38
Risk-free interest rate			1.99	%			0.21	%
Dividend yield			1.10	%			0.60	%
Weighted average fair value		$	9.39			$	7.08

     The weighted average fair values per share of the restricted stock units granted in the three months ended March 31, 2010 was $28.91 calculated based on the fair market value of our Class A common stock on the respective grant dates less any expected dividend yield.

Stock-Based Compensation Expense

     The following table presents details of total stock-based compensation expense that is included in each functional line item on our unaudited condensed consolidated statements of operations:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Cost of product revenue		$	6,515			$	5,877
Research and development			89,043				89,262
Selling, general and administrative			31,083				28,634
		$	126,641			$	123,773

     The amount of unearned stock-based compensation currently estimated to be expensed from 2010 through 2014 related to unvested share-based payment awards at March 31, 2010 is $991.8 million. The following table presents details of unearned stock-based compensation currently estimated to be expensed in the remainder of 2010 through 2014 related to unvested share-based payment awards at March 31, 2010:

		2010				2011				2012				2013				2014				Total
										(In thousands)
Unearned stock-based compensation		$	336,191			$	338,558			$	208,229			$	102,000			$	6,779			$	991,757

     The weighted-average period over which the unearned stock-based compensation is expected to be recognized is 1.5 years.

     If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional equity awards or assume unvested equity awards in connection with acquisitions.

8. Litigation

     Intellectual Property Proceedings. In December 2006 SiRF Technology, Inc., or SiRF, filed a complaint in the United States District Court for the Central District of California against Global Locate, Inc., a privately-held company that became a wholly-owned subsidiary of Broadcom in July 2007, alleging that certain Global Locate products infringe four SiRF patents relating generally to GPS technology. In January 2007 Global Locate filed an answer denying the allegations in SiRF’s complaint and asserting counterclaims. The counterclaims seek a declaratory judgment that the four SiRF patents are invalid and not infringed, assert that SiRF has infringed four

Global Locate patents relating generally to GPS technology, and assert unfair competition and antitrust violations related to the filing of sham litigation. In May 2007 the court granted Global Locate’s motion to stay the case until the U.S. International Trade Commission, or ITC, actions between Global Locate and SiRF, discussed below, become final.

     In February 2007 SiRF filed a complaint in the ITC alleging that Global Locate engaged in unfair trade practices by importing integrated circuits and other products that infringe, both directly and indirectly, four SiRF patents relating generally to GPS technology. The complaint seeks an exclusion order to bar importation of those Global Locate products into the United States and a cease and desist order to bar further sales of infringing Global Locate products that have already been imported. In March 2007 the ITC instituted an investigation of Global Locate based upon the allegations made in the SiRF complaint. SiRF withdrew two patents from the investigation, and an ITC administrative law judge conducted a hearing on SiRF’s remaining two patents in suit in March 2008. In June 2008 the ITC administrative law judge issued an initial determination finding SiRF’s two patents not infringed and one patent invalid. In August 2008 the ITC denied SiRF’s petition to review the administrative law judge’s initial determination finding no violation, thereby adopting the administrative law judge’s initial determination as the final determination of the ITC and terminating the investigation. In October 2008 SiRF filed a notice of appeal with the United States Court of Appeal for the Federal Circuit. In March 2009, SiRF filed a request to withdraw its appeal which was subsequently granted by the United States Court of Appeal for the Federal Circuit.

     In April 2007 Global Locate filed a complaint in the ITC against SiRF and four of its customers, e-TEN Corporation, Pharos Science & Applications, Inc., MiTAC International Corporation and Mio Technology Limited, referred to collectively as the SiRF Defendants, asserting that the SiRF Defendants engaged in unfair trade practices by importing GPS devices, including integrated circuits and embedded software, incorporated in products such as personal navigation devices and GPS-enabled cellular telephones that infringe, both directly and indirectly, six Global Locate patents relating generally to GPS technology. The complaint seeks an exclusion order to bar importation of the SiRF Defendants’ products into the United States and a cease and desist order to bar further sales of infringing products that have already been imported. In May 2007 the ITC instituted an investigation of the SiRF Defendants based upon the allegations made in the Global Locate complaint. A hearing was held in April and May 2008. In August 2008 the administrative law judge issued an initial determination finding that SiRF and the other SiRF Defendants infringed each of Global Locate’s six patents, and that each of the six patents was not invalid and issued a recommended determination on remedy and bonding. In October 2008 the ITC determined, in part, not to review the administrative law judge’s initial determination finding violation of three of Global Locate’s patents. The ITC also decided to review the administrative law judge’s initial determination that three other Global Locate patents were infringed by SiRF.

     In January 2009 the Commission issued a Final Determination and upheld the ITC administrative law judge’s August 2008 initial determination finding that SiRF and the other SiRF respondants infringe six Global Locate patents and that each of the six patents was not invalid. The Commission also issued an exclusion order banning the importation into the United States of infringing SiRF chips and the SiRF Defendants’ products containing infringing SiRF chips and a cease and desist order prohibiting SiRF and the certain other SiRF Defendants from engaging in certain activities related to the infringing chips. In April 2010, the United States Court of Appeals for the Federal Circuit affirmed the ITC’s decision.

     In May 2008 Broadcom filed a complaint in the United States District Court for the Central District of California against SiRF, alleging that certain SiRF GPS and multimedia products infringe four Broadcom patents relating generally to graphics and communications technology. The District Court complaint seeks preliminary and permanent injunctions against SiRF and the recovery of monetary damages, including treble damages for willful infringement, and attorneys’ fees. In June 2008 SiRF answered the complaint and asserted counterclaims seeking a declaratory judgment that Broadcom’s patents are invalid and not infringed. In September 2008 the court denied SiRF’s motion to stay the case. Discovery is ongoing. In October 2009, Broadcom amended its complaint to add CSR plc as a defendant and assert claims alleging false advertisement and unfair competition. In October 2009 SiRF answered the amended complaint denying liability and asserting counterclaims alleging false advertising and unfair competition. In December 2009 we answered SiRF’s counterclaims denying liability. In December 2009, the judge granted the parties joint stipulation of dismissal with prejudice for all claims relating to one of the Broadcom patents; three Broadcom patents remain in the lawsuit. Trial has been set for January 2011.

     In October 2007 Wi-LAN Inc. filed complaints against us and multiple other defendants in the United States District Court for the Eastern District of Texas alleging that certain Broadcom products infringe three Wi-LAN patents relating generally to wireless LAN and DSL technology. The complaint seeks a permanent injunction against us as well as the recovery of monetary damages and attorneys’ fees. We filed an answer in January 2008 denying the allegations in Wi-LAN’s complaint and asserting counterclaims seeking a declaratory judgment that the three Wi-LAN patents are invalid, unenforceable and not infringed. In February 2009 Wi-LAN filed a supplemental complaint alleging that certain Broadcom products infringe a fourth Wi-LAN patent relating generally to Bluetooth technology. The complaint seeks a permanent injunction against us as well as the recovery of monetary damages and attorneys’ fees. We filed an answer in February 2009 denying the allegations in Wi-LAN’s complaint and asserting counterclaims seeking a declaratory judgment that the fourth Wi-LAN patent is invalid, unenforceable and not infringed. Discovery is ongoing. Trial has been set for January 2011.

     In April 2010, Wi-LAN Inc. filed a new complaint against us and multiple other defendants in the United States District Court for the Eastern District of Texas alleging that certain Broadcom Bluetooth products infringe a fifth Wi-LAN patent. The complaint seeks a permanent injunction, damages, and attorney’s fees. We are reviewing the complaint and have not yet filed a response. No trial date has been set.

     In September 2009 we filed a complaint in the United States District Court for the Central District of California against Emulex Corporation, or Emulex, alleging infringement of ten patents generally relating to networking technologies. In February 2010, we amended our complaint to allege infringement of an additional patent, bringing the total to eleven. Our complaint seeks preliminary and permanent injunctions against Emulex and the recovery of monetary damages, including treble damages for willful infringement, and attorneys’ fees. In its answer, Emulex denied liability and asserted counterclaims seeking a declaratory judgment that the eleven patents are invalid and not infringed. Discovery is currently underway, with trial set for September 2011.

     In November 2009 we filed a complaint in the United States District Court for the Eastern District of Texas against the Commonwealth Scientific and Industrial Research Organisation (CSIRO) seeking a declaratory judgment that U.S. Patent Number 5,487,069 is invalid, unenforceable and not infringed. CSIRO has not yet answered the complaint. Trial has been set for October 2011.

     Securities Litigation and Other Related Matters. In November 2009 Emulex filed a complaint in the Central District of California against Broadcom alleging violation of the antitrust laws, defamation, and unfair competition. The complaint seeks injunctive relief and monetary damages, including treble damages and attorneys’ fees. In January 2010, Emulex filed an amended complaint in which Emulex removed, among other things, the claim of unfair competition. In February 2010, we filed motions to dismiss the case, which are scheduled to be heard in May 2010. No trial date has been set. We intend to defend this action vigorously.

     From March through August 2006 a number of purported Broadcom shareholders filed putative shareholder derivative actions, the Options Derivative Actions, against Broadcom, each of the then members of our Board of Directors and certain current or former officers, alleging, among other things, that the defendants improperly dated certain Broadcom employee stock option grants. Four of those cases, Murphy v. McGregor, et al. (Case No. CV06-3252 R (CWx)), Shei v. McGregor, et al. (Case No. SACV06-663 R (CWx)), Ronconi v. Dull, et al. (Case No. SACV 06-771 R (CWx)) and Jin v. Broadcom Corporation, et al. (Case No. 06CV00573) have been consolidated in the United States District Court for the Central District of California. The plaintiffs filed a consolidated amended complaint in November 2006. In addition, two putative shareholder derivative actions, Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Samueli, et al. (Case No. 06CC0124) and Servais v. Samueli, et al. (Case No. 06CC0142), were filed in the California Superior Court for the County of Orange. The Superior Court consolidated the state court derivative actions in August 2006, and the plaintiffs filed a consolidated amended complaint in September 2006. The plaintiffs in the Options Derivative Actions contend, among other things, that the defendants’ conduct violated United States and California securities laws, breached defendants’ fiduciary duties, wasted corporate assets, unjustly enriched the defendants, and caused errors in our consolidated financial statements. The plaintiffs seek, among other things, unspecified damages and disgorgement of profits from the alleged conduct, to be paid to Broadcom.

     In January 2007 the California Superior Court granted defendants’ motion to stay the state derivative action pending resolution of the prior-filed federal derivative action. In March 2007 the court in the federal derivative action denied our motion to dismiss, which motion was based on the ground that the shareholder plaintiffs lack

standing to assert claims on behalf of Broadcom. Motions to dismiss filed by the individual defendants were heard, and mostly denied, in May 2007. Additionally, in May 2007 the Board of Directors established a special litigation committee, or SLC, to decide what course of action Broadcom should pursue in respect of the claims asserted in the Options Derivative Actions.

     In August 2009 Broadcom, by and through its SLC, plaintiffs and certain of the defendants executed a Stipulation and Agreement of Partial Settlement, or Partial Derivative Settlement, in the federal derivative action pertaining to past employee stock option grants. The Partial Derivative Settlement resolved all claims in the action against the defendants, other than three individuals: Dr. Henry T. Nicholas, III, our former President and Chief Executive Officer and former Co-Chairman of the Board, William J. Ruehle, our former Chief Financial Officer, and Dr. Henry Samueli, our Chief Technical Officer. In connection with the Partial Derivative Settlement, Broadcom and certain of the defendants also entered into a settlement with Broadcom’s directors and officers liability insurance carriers, or Insurance Agreement. On September 30, 2009 the United States District Court for the Central District of California issued an order preliminarily approving the Partial Derivative Settlement. On December 14, 2009, the District Court entered an order granting final approval of the Partial Derivative Settlement. On January 6, January 8 and January 11, 2010, Dr. Nicholas, Mr. Ruehle, and Dr. Samueli filed notices of appeal of the order in the United States Court of Appeals for the Ninth Circuit.

     On March 31, 2010 the SLC formally and unanimously adopted a Report of the Special Litigation Committee of the Board of Directors of Broadcom, or Report. On April 1, 2010, the SLC directed Broadcom’s General Counsel to file a motion for summary judgment in the derivative action based on the findings and recommendations of the Report. That motion was filed April 5, 2010, seeking dismissal of the claims against the three remaining defendants. We cannot predict whether the District Court will grant the motion.

     From August through October 2006 several plaintiffs filed purported shareholder class actions in the United States District Court for the Central District of California against Broadcom and certain of our current or former officers and directors, entitled Bakshi v. Samueli, et al. (Case No. 06-5036 R (CWx)), Mills v. Samueli, et al. (Case No. SACV 06-9674 DOC R(CWx)), and Minnesota Bakers Union Pension Fund, et al. v. Broadcom Corp., et al. (Case No. SACV 06-970 CJC R (CWx)), the Stock Option Class Actions. The essence of the plaintiffs’ allegations is that we improperly backdated stock options, resulting in false or misleading disclosures concerning, among other things, our business and financial condition. Plaintiffs also allege that we failed to account for and pay taxes on stock options properly, that the individual defendants sold our common stock while in possession of material nonpublic information, and that the defendants’ conduct caused artificial inflation in our stock price and damages to the putative plaintiff class. The plaintiffs assert claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. In November 2006 the Court consolidated the Stock Option Class Actions and appointed the New Mexico State Investment Council as lead class plaintiff. In October 2007 the federal appeals court resolved a dispute regarding the appointment of lead class counsel. In March 2008 the district judge entered a revised order appointing lead class counsel. The lead plaintiff filed an amended consolidated class action complaint in late April 2008, naming additional defendants including certain current officers and directors of Broadcom as well as Ernst & Young LLP, our former independent registered public accounting firm, or E&Y. In October 2008 the district judge granted defendants’ motions to dismiss with leave to amend. In October 2008 the lead plaintiff filed an amended complaint. In November 2008 defendants filed motions to dismiss. In February 2009 these motions were denied except with respect to E&Y and the former Chairman of the Audit Committee, which were granted with leave to amend, and with respect to the former Chief Executive Officer, which was granted without leave to amend. The lead plaintiff did not amend its complaint with respect to the former Chairman of the Audit Committee and the time period to do so has expired. With respect to E&Y, in March 2009 the district judge entered a final judgment for E&Y and against the lead plaintiff. The lead plaintiff has appealed the final judgment.

     In December 2009 we agreed in principle to settle the Stock Option Class Actions. Under the proposed settlement, the claims against Broadcom and its current and former officers and directors will be dismissed with prejudice and released in exchange for a $160.5 million cash payment by Broadcom. We recorded the settlement amount as a one-time charge in 2009. The proposed settlement remains subject to the satisfaction of various conditions, including negotiation and execution of a final stipulation of settlement and court approval. If these conditions are satisfied, the proposed settlement will resolve all claims in the Stock Option Class Actions against Broadcom and the individual defendants. In the event that we are unable to execute a final stipulation of settlement and obtain court approval, our ultimate liability could differ materially.

     In April 2008 we delivered a Notice of Arbitration and Arbitration Claim to our former independent registered public accounting firm, E&Y, and certain related parties. The arbitration relates to the issues that led to the restatement of Broadcom’s financial statements for the periods from 1998 through March 31, 2006 as disclosed in an amended Annual Report on Form 10-K/A for the year ended December 31, 2005 and an amended Quarterly Report on Form 10-Q/A for the three months ended March 31, 2006, each filed with the SEC January 23, 2007. In May 2008 E&Y delivered a Notice of Defense and Counterclaim. No date for an arbitration hearing has been scheduled.

     We have indemnification agreements with each of our present and former directors and officers, under which we are generally required to indemnify each such director or officer against expenses, including attorneys’ fees, judgments, fines and settlements, arising from the Options Derivative Actions, the Stock Option Class Actions and the SEC and U.S. Attorney’s Office investigations described below (subject to certain exceptions, including liabilities arising from willful misconduct, from conduct knowingly contrary to the best interests of Broadcom, or conduct that is knowingly fraudulent or deliberately dishonest or results in improper personal benefit). The potential amount of the future payments we could be required to make under these indemnification obligations could be significant and could have a material impact on our results of operations. Pursuant to the Insurance Agreement, and subject to the terms described more completely therein, including relinquishing of rights to any further recovery as to the matters described above under these directors’ and officers’ liability insurance policies by Broadcom and certain of its former and current officers and directors, Broadcom received payments totaling $118.0 million from its insurance carriers. That amount includes $43.3 million in reimbursements previously received from the insurance carriers under reservations of rights, and $74.7 million paid to Broadcom upon final approval of the Partial Derivative Settlement. In addition, Broadcom paid $11.5 million to the lead federal derivative plaintiffs’ counsel for attorneys’ fees, expenses and costs of plaintiffs’ counsel in connection with the Partial Derivative Settlement and their prosecution of the derivative action.

     In the event that the trial court’s approval of the Partial Derivative Settlement is reversed or vacated by an appellate court or otherwise does not become final and non-appealable, Broadcom in its sole discretion has the election to either provide a release to the insurance carriers and indemnify them related to any future claims and retain the $118.0 million in accordance with the Insurance Agreement or to repay to the insurance carriers certain portions of the aggregate amount previously paid to Broadcom.

     SEC Formal Order of Investigation and United States Attorney’s Office Investigation. In April 2008 the SEC brought a complaint against Broadcom alleging violations of the federal securities laws, and we entered into a settlement with the SEC. Without admitting or denying the SEC’s allegations, we paid a civil penalty of $12.0 million, which we recorded as a settlement cost in the three months ended March 31, 2008, and stipulated to an injunction against future violations of certain provisions of the federal securities laws. The settlement was approved by the United States District Court for the Central District of California in late April 2008, thus concluding the SEC’s investigation of this matter with respect to Broadcom.

     In May 2008 the SEC filed a complaint in the United States District Court for the Central District of California (Case No. SACV08-539 CJC (RNBx)) against Dr. Samueli and three other former executive officers of Broadcom, relating to its previously-disclosed investigation of the company’s historical stock option granting practices. The SEC’s civil complaint alleged that Dr. Samueli, along with the other defendants, violated the anti-fraud provisions of the federal securities laws, falsified books and records, and caused the company to report false financial results. The SEC’s complaint seeks to: (i) enjoin the defendants from future violations of the securities laws; (ii) require two of the defendants to disgorge any ill-gotten gains and pay prejudgment interest; (iii) require all defendants to pay civil monetary penalties; (iv) require two defendants to disgorge bonuses and stock sales profits pursuant to Section 304 of the Sarbanes-Oxley Act of 2002; (v) bar all defendants from serving as officers or directors of a public company; and (vi) provide other appropriate relief. On December 15, 2009, in connection with the criminal matters discussed below, the District Court dismissed the SEC’s complaint without prejudice as to all defendants. The SEC was given 30 days to refile or amend its complaint if it chose to do so. On February 4, 2010, the SEC filed a notice indicating that it would not proceed with the case. After the SEC complaint was dismissed, Dr. Samueli was re-elected Chief Technical Officer. He is not currently a director or an executive officer.

     In August 2006 we were informally contacted by the U.S. Attorney’s Office for the Central District of California and asked to produce documents related to our historical option granting practices. We cooperated with the U.S. Attorney’s Office and provided substantial amounts of documents and information to the U.S. Attorney’s Office on a voluntary basis and pursuant to grand jury subpoenas. In June 2008 Dr. Nicholas and Mr. Ruehle were named in an indictment relating to alleged stock option backdating at the company. Also, in June 2008 Dr. Samueli pled guilty to making a materially false statement to the SEC in connection with its investigation of alleged stock options backdating at the company. In September 2008 the United States District Court for the Central District of California rejected Dr. Samueli’s plea agreement. Dr. Samueli appealed the ruling to the United States Court of Appeals for the Ninth Circuit, but that court rejected his appeal. On December 7, 2009, the District Court granted Dr. Samueli use immunity so that he could testify in Mr. Ruehle’s trial. On December 8, 2009, at the conclusion of Dr. Samueli’s testimony, the District Court set aside Dr. Samueli’s guilty plea and dismissed the information against him. Mr. Ruehle’s trial began in October 2009 and concluded December 15, 2009. After both sides rested, the District Court dismissed the indictment against Mr. Ruehle on the grounds of prosecutorial misconduct and insufficient evidence of criminal intent. The District Court simultaneously dismissed the option charges against Dr. Nicholas, which were scheduled to be tried in February 2010. The U.S. Attorney’s office has filed notices of appeal as to both Dr. Nicholas and Dr. Samueli, but has also represented to the District Court that no final decision has yet been reached as to whether those appeals will be pursued. Any further action by the U.S. Attorney’s Office or another governmental agency could result in additional civil or criminal sanctions and/or fines against us and/or certain of our current or former officers, directors and/or employees.

     United States Attorney’s Office Investigation and Prosecution. In June 2005 the United States Attorney’s Office for the Northern District of California commenced an investigation into the possible misuse of proprietary competitor information by certain Broadcom employees. In December 2005 one former employee was indicted for fraud and related activity in connection with computers and trade secret misappropriation. The former employee had been immediately suspended in June 2005, after just two months’ employment, when we learned about the government investigation. Following an internal investigation, his employment was terminated, nearly two months prior to the indictment. The indictment does not allege any wrongdoing by us, and we are cooperating fully with the ongoing investigation and the prosecution.

     General. We and our subsidiaries are also involved in other legal proceedings, claims and litigation arising in the ordinary course of business.

     The pending proceedings involve complex questions of fact and law and will require the expenditure of significant funds and the diversion of other resources to prosecute and defend. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. The resolution of intellectual property litigation may require us to pay damages for past infringement or to obtain a license under the other party’s intellectual property rights that could require one-time license fees or ongoing royalties, which could adversely impact our product gross margins in future periods, or could prevent us from manufacturing or selling some of our products or limit or restrict the type of work that employees involved in such litigation may perform for us. From time to time we may enter into confidential discussions regarding the potential settlement of pending litigation or other proceedings; however, there can be no assurance that any such discussions will occur or will result in a settlement. The settlement of any pending litigation or other proceeding could require us to incur substantial settlement payments and costs. In addition, the settlement of any intellectual property proceeding may require us to grant a license to certain of our intellectual property rights to the other party under a cross-license agreement. If any of those events were to occur, our business, financial condition and results of operations could be materially and adversely affected.

9. Business Enterprise Segments

     Broadcom has three reportable segments consistent with our target markets. Our three reportable segments are: Broadband Communications (Home), Mobile & Wireless (Hand) and Enterprise Networking (Infrastructure).

     Our Chief Executive Officer, who is our chief operating decision maker, or CODM, reviews financial information at the operating segment level. Our Mobile & Wireless reportable segment comprises our Mobile Platforms and Wireless Connectivity businesses. Our Mobile Platforms and Wireless Connectivity businesses (originally operated as a single operating segment) are reported separately to the CODM to allow greater management focus on our Mobile Platform opportunity. However as the customers, economics, and competitors

substantially overlap, and the product functionality is being integrated across these products in our own and competitor roadmaps, we aggregate these two businesses into one reportable segment, Mobile & Wireless.

     We also report an “All Other” category that primarily includes licensing revenue from our agreement with Verizon Wireless and income from the Qualcomm Agreement since they are principally the result of corporate efforts. “All Other” also includes operating expenses that we do not allocate to our other operating segments as these expenses are not included in the segment operating performance measures evaluated by our CODM. Operating costs and expenses that are not allocated include stock-based compensation, amortization of purchased intangible assets, impairment of goodwill and other long-lived assets, net settlement costs, net restructuring costs, charitable contributions, employer payroll tax on certain stock option exercises, and other miscellaneous expenses related to corporate allocations that were either over or under the original projections at the beginning of the year. We include stock-based compensation and acquisition-related items in the “All Other” category as decisions regarding equity compensation are made at the corporate level and our CODM believes that acquisition accounting distorts the underlying economics of the reportable segment. Our CODM does not review any information regarding total assets on an operating segment basis. The accounting policies for segment reporting are the same as for Broadcom as a whole.

     The following table presents details of our reportable segments and the “All Other” category:

		Reportable Segments
		Broadband				Mobile &				Enterprise				All
		Communications				Wireless				Networking				Other				Consolidated
		(In thousands)
Three Months Ended March 31, 2010
Net revenue		$	463,785			$	554,294			$	392,296			$	51,924			$	1,462,299
Operating income (loss)			84,203				60,937				150,168				(87,976	)			207,332
Three Months Ended March 31, 2009
Net revenue		$	317,254			$	298,862			$	218,351			$	18,969			$	853,436
Operating income (loss)			10,284				(40,477	)			41,602				(114,442	)			(103,033	)

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Net revenue		$	51,924			$	18,969
Stock-based compensation		$	126,641			$	123,773
Amortization of purchased intangible assets			9,866				8,272
Settlement costs, net			2,816				1,150
Restructuring costs, net			430				7,111
Employer payroll tax on certain stock option exercises			1,568				733
Miscellaneous corporate allocation variances			(1,421	)			(7,628	)
Total other operating costs and expenses		$	139,900			$	133,411
Total operating income (loss) for the “All Other” category		$	(87,976	)		$	(114,442	)

     Sales to our significant customers, including sales to their manufacturing subcontractors, as a percentage of net revenue were as follows:

		Three Months Ended
		March 31,
		2010				2009
Five largest customers as a group			35.2	%			33.6	%

     In the three months ended March 31, 2010 we had one customer that represented 12.4% of our total net revenue.

     Product revenue derived from all independent customers located outside the United States, excluding foreign subsidiaries or manufacturing subcontractors of customers that are headquartered in the United States even though such subsidiaries or manufacturing subcontractors are located outside of the United States, as a percentage of product revenue was as follows:

		Three Months Ended
		March 31,
		2010				2009
Asia (primarily in Korea, China, Japan and Taiwan)			41.6	%			36.6	%
Europe (primarily in the United Kingdom, Finland and France)			14.1				13.3
Other			0.8				0.3
			56.5	%			50.2	%

     Product revenue derived from shipments to international destinations, as a percentage of product revenue was as follows:

		Three Months Ended
		March 31,
		2010				2009
Asia (primarily in China, Hong Kong, Singapore and Taiwan)			92.7	%			87.4	%
Europe (primarily in Sweden, France and Hungary)			2.4				4.0
Other			1.2				1.3
			96.3	%			92.7	%

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement

     You should read the following discussion and analysis in conjunction with our Unaudited Condensed Consolidated Financial Statements and the related Notes thereto contained in Part I, Item 1 of this Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K for the year ended December 31, 2009 and subsequent reports on Forms 10-Q and 8-K, which discuss our business in greater detail.

     The section entitled “Risk Factors” contained in Part II, Item 1A of this Report, and similar discussions in our other SEC filings, describe some of the important risk factors that may affect our business, financial condition, results of operations and/or liquidity. You should carefully consider those risks, in addition to the other information in this Report and in our other filings with the SEC, before deciding to purchase, hold or sell our common stock.

     All statements included or incorporated by reference in this Quarterly Report on Form 10-Q, other than statements or characterizations of historical fact, are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements concerning projected total net revenue, costs and expenses and product gross margin; our accounting estimates, assumptions and judgments; our success in pending litigation matters; estimates related to the amount and/or timing of the expensing of unearned stock-based compensation expense; the demand for our products; the effect that recent economic conditions, seasonality and volume fluctuations in the demand for our customers’ consumer-oriented products will have on our quarterly operating results; our dependence on a few key customers and/or design wins for a substantial portion of our revenue; our ability to adjust operations in response to changes in demand for existing products and services or the demand for new products requested by our customers; the competitive nature of and anticipated growth in our markets; our ability to migrate to smaller process geometries; manufacturing, assembly and test capacity; our ability to consummate acquisitions and integrate their operations successfully; our potential needs for additional capital; inventory and accounts receivable levels; the impact of the Internal Revenue Service review of certain income and employment tax returns on our results of operations; the effect of potential changes in U.S. or foreign tax laws and regulations or the interpretation thereof; the level of accrued rebates; income we expect to record in connection with the Qualcomm Agreement; and the impact of litigation related to the January 2007 restatement of our financial statements for prior periods. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, some of which are listed under the section entitled “Risk Factors” in Part II, Item 1A of this Report. These forward-looking statements speak only as of the date of this Report. We undertake no obligation to revise or update publicly any forward-looking statement, except as otherwise required by law.

Overview

     Broadcom Corporation (including our subsidiaries, referred to collectively in this Report as “Broadcom,” “we,” “our” and “us”) is a major technology innovator and global leader in semiconductors for wired and wireless communications. Our system-on-a-chip (SoC) and software solutions enable the delivery of voice, video, data and rich multimedia content to mobile devices, consumer electronics (CE) devices in the home and business networking products for the workplace, data centers, service providers and carriers. We provide the industry’s broadest portfolio of cutting-edge SoC solutions to manufacturers of computing and networking equipment, CE and broadband access products, and mobile devices.

     We sell our products to leading wired and wireless communications manufacturers in each of our reportable segments: Broadband Communications (Home), Mobile & Wireless (Hand) and Enterprise Networking (Infrastructure). Our Mobile & Wireless reportable segment comprises our Mobile Platforms and Wireless Connectivity businesses. Because we leverage our technologies across different markets, certain of our integrated

circuits may be incorporated into products used in multiple markets. We utilize independent foundries and third-party subcontractors to manufacture, assemble and test all of our semiconductor products.

     Our diverse product portfolio includes:

	•		Solutions for the Home (Broadband Communications) — enabling such products as digital cable, satellite and Internet Protocol (IP) set-top boxes and media servers; cable and digital subscriber line (DSL) modems and residential gateways; high definition televisions (HDTVs); high definition Blu-ray Disc® players; and digital video recorders (DVRs).
	•		Solutions for the Hand (Mobile & Wireless) — integrating solutions in applications for wireless and personal area networking; cellular communications; personal navigation and global positioning; processing multimedia content in smartphones; and for managing the power in mobile devices; and
	•		Solutions for Network Infrastructure (Enterprise Networking)— incorporating solutions for the business network requirements of enterprise, data center, small-to-medium-sized businesses (SMBs), and carriers and service providers, featuring high-speed controllers, switches and physical layer (PHY) devices supporting transmission and switching for local, metropolitan, wide area and storage networking and server solutions; processors for broadband network and security applications; and Voice over Internet Protocol (VoIP) solutions for gateway and telephony systems.

     Our product revenue consists principally of sales of semiconductor devices and, to a lesser extent, software licenses and royalties, development, support and maintenance agreements, data services and cancellation fees. The majority of our product sales occur through the efforts of our direct sales force. The remaining balance of our product sales occurs through distributors. Our licensing revenue and income from the Qualcomm Agreement is generated from the licensing of our intellectual property, of which the vast majority to date has been derived from agreements with two customers, Verizon Wireless and Qualcomm Incorporated. The licensing revenue from our agreement with Verizon Wireless ended in March 2009 and the income from the Qualcomm Agreement is non-recurring and will terminate in 2013. There can be no assurances that we will be able to enter into similar arrangements in the future.

     A detailed discussion of our business may be found in Part I, Item 1, “Business,” of our 2009 Annual Report on Form 10-K.

     Operating Results for the Three Months Ended March 31, 2010

     In the three months ended March 31, 2010 our net income was $210.2 million as compared to a net loss of $91.9 million in the three months ended March 31, 2009, a difference of $302.1 million. This increase in profitability was the direct result of a broad-based increase in net revenue of 71.3% and a 480 basis point increase in our total gross margin. These increases were partially offset by an increase in our research and development and selling, general and administrative expenses of $56.0 million, primarily related to increase in headcount of 8.1% from the March 31, 2009 level as well as an increase in development and design costs. Other highlights include the following:

	•		We generated cash flow from operations of $267.8 million during the three months ended March 31, 2010. Our cash and cash equivalents and marketable securities were $2.355 billion at March 31, 2010, compared with $2.368 billion at December 31, 2009.
	•		In January 2010 our Board of Directors adopted a dividend policy pursuant to which we intend to pay quarterly cash dividends on our common stock. We declared the first quarterly cash dividend of $0.08 per share which was paid March 8, 2010 to holders of our Class A and Class B common stock of record at the close of business February 19, 2010 and totaled $39.6 million.
	•		In February 2010, as part of Broadcom’s regular annual equity compensation review program, our Compensation Committee granted 10.1 million shares subject to equity awards, which included 2.2 million shares under employee stock options and 7.9 million restricted stock units. The amount of unearned stock-

			based compensation associated with these grants is $247.6 million and is estimated to be expensed from 2010 through 2014.
	•		In March 2010 we acquired Teknovus, Inc., a leading supplier of Ethernet Passive Optical Network chipsets and software, $100.1 million, net of cash acquired. We also assumed $14.6 million of debt which was subsequently repaid in the three months ended March 31, 2010.
	•		We repurchased a total of 5.2 million shares of our Class A common stock at a weighted average price of $29.75 per share in the three months ended March 31, 2010 and we announced that our Board of Directors had authorized an evergreen share repurchase program intended to offset the dilution associated with our stock incentive plans.

     Business Enterprise Segments.

     The following table presents details of our reportable segments and the “All Other” category:

		Reportable Segments
		Broadband				Mobile &				Enterprise				All
		Communications				Wireless				Networking				Other				Consolidated
						(In thousands)
Three Months Ended March 31, 2010
Net revenue		$	463,785			$	554,294			$	392,296			$	51,924			$	1,462,299
Operating income (loss)			84,203				60,937				150,168				(87,976	)			207,332
Three Months Ended March 31, 2009
Net revenue		$	317,254			$	298,862			$	218,351			$	18,969			$	853,436
Operating income (loss)			10,284				(40,477	)			41,602				(114,442	)			(103,033	)

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Net revenue		$	51,924			$	18,969
Stock-based compensation		$	126,641			$	123,773
Amortization of purchased intangible assets			9,866				8,272
Settlement costs, net			2,816				1,150
Restructuring costs, net			430				7,111
Employer payroll tax on certain stock option exercises			1,568				733
Miscellaneous corporate allocation variances			(1,421	)			(7,628	)
Total other operating costs and expenses		$	139,900			$	133,411
Total operating income (loss) for the “All Other” category		$	(87,976	)		$	(114,442	)

     For additional information about our business enterprise segments, see further discussion in Note 9 of Notes to Unaudited Condensed Consolidated Financial Statements.

     Factors That May Impact Net Income (Loss)

     Our net income (loss) has been affected in the past, and may continue to be affected in the future, by various factors, including, but not limited to, the following:

	•		required levels of research and development and other operating costs;
	•		stock-based compensation expense;
	•		licensing of intellectual property and income from the Qualcomm Agreement;
	•		deferral of revenue under multiple-element arrangements;
	•		amortization of purchased intangible assets;
	•		cash-based incentive compensation expense;
	•		litigation costs and insurance recoveries, including our directors’ and officers’ insurance settlement;
	•		settlement costs or gains, including our proposed class action settlement;
	•		income tax benefits from adjustments to tax reserves of foreign subsidiaries;
	•		the loss of interest income resulting from lower average interest rates and investment balance reductions resulting from expenditures on repurchases of our Class A common stock, dividends and acquisitions of businesses;
	•		impairment of goodwill and long-lived assets;
	•		charitable contributions;
	•		other-than-temporary impairment of marketable securities and strategic investments;
	•		restructuring costs or reversals thereof; and
	•		gain (loss) on strategic investments.