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The story
Founded by Henry Nicholas and Henry Samueli on Aug 1991.1
Founding and growth
Broadcom Corporation was founded by professor-student pair Henry Samueli and Henry Nicholas from UCLA in 1991. In 1995 the company moved from its Westwood, Los Angeles, office to Irvine, California. In 1998, Broadcom became a public company on the NASDAQ exchange (ticker symbol: BRCM) and employs about 11,750 people worldwide in more than 15 countries.
Broadcom Corporation acquired ServerWorks Corporation, a maker of chipsets for IA-32-based servers, in 2001 for $957 million. This acquisition was one in a string of purchases of companies by Broadcom in the beginning of the 2000s. Unlike the others, which were struggling start-ups, ServerWorks was revenue-generating and profitable.
In 2012, Broadcom's total revenue was $8.01 billion. As of 2011, Broadcom was among Gartner's Top 10 Semiconductor Vendors by revenue. Broadcom first landed on the Fortune 500 in 2009, and climbed to spot #327 in 2013.
Battle with Qualcomm
In June 2007, the U.S. International Trade Commission blocked the import of new cell phone models based on particular Qualcomm microchips. They had found that these Qualcomm microchips infringed on patents owned by Broadcom. In January 2017, the FTC sued Qualcomm, who allegedly made use of unlawful tactics to maintain "a monopoly on cellular-communications chips."
On April 26, 2009, Broadcom settled its four-year legal battle with Qualcomm over wireless and other patents. The deal also ended the complaints of anti-competitive behavior. As part of the settlement, Qualcomm paid $891 million in cash to Broadcom over a four-year period ending June 2013.
Stock options backdating scandal
In March 2006, a report by the Center for Financial Research and Analysis identified Broadcom as one of 17 companies "at risk" for having back-dated stock options grants between 1997 and 2002. On May 18, 2006, amid media reports about options practices, Broadcom said it had started an internal review of its stock options grants. On June 12, 2006, Broadcom announced it had received a "request for information" from the U.S. Securities and Exchange Commission (SEC), and that it might soon be the subject of an informal inquiry.
On July 14, 2006, Broadcom estimated it would have to subtract $750 million from earnings due to stock options irregularities. On September 8, 2006, the company announced the amount was at least $1.5 billion, "and could be substantially more." On December 18, 2006, the SEC opened a formal investigation of Broadcom's options practices. On January 24, 2007, Broadcom announced a restatement of its financial results from 1998 to 2005 to include a total of $2.24 billion-worth of expenses related to stock option-based compensation. The grants remained the subject of the formal inquiry by the SEC, and an informal inquiry by federal prosecutors.
In between March and May 2008, the SEC announced charges against Broadcom for fraudulently backdating stock options for nearly five years, from June 1998 to May 2003. In its complaint, the SEC alleged that Broadcom's top officers at the time had misrepresented the dates on which stock options were granted to executives and employees. In describing the scheme, the SEC said: "Through backdating, Broadcom made it appear that the options were granted at times corresponding to low points of the closing price of Broadcom's stock — despite the fact that the purported grant date bore no relation to when the grant was actually approved. This resulted in artificially and fraudulently low exercise prices for those options."
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On May 15, 2008, Broadcom co-founder and CTO Henry Samueli resigned as chairman of the board, and took a leave of absence as Chief Technology Officer. On June 5, 2008, Broadcom co-founder and former CEO Henry Nicholas and former CFO William Ruehle were indicted on charges of illegal stock-option backdating. Nicholas was also indicted for violations of federal narcotics laws. However, in December 2009, federal judge Cormac J. Carney threw out the options backdating charges against Nicholas and Ruehle because of prosecutorial misconduct, after finding that federal prosecutors improperly tried to prevent three defense witnesses from testifying.
In 2008, the U.S. Securities and Exchange Commission (SEC) charged executives of Broadcom with fraudulently backdating stock options. Through the scheme, company executives allegedly avoided reporting $2.22 billion in compensation expenses. The company also allegedly overstated its income by between 15% and 422%, and understated its loss by between 16% and 38%, according to the SEC. A judge dismissed the charges against company executives Henry Nicholas and Henry Samueli, citing witness intimidation on the part of prosecutors. The judge also dismissed charges against chief financial officer William Ruehle. In the end, the company had to pay $160M to settle with the SEC.
Acquired
On May 28, 2015, chip maker Avago Technologies Ltd. agreed to buy Broadcom Corp. for $37 billion in cash and stock. At closing, which completed on February 1, 2016, Broadcom shareholders held 32% of the new Singapore-based company to be called Broadcom Limited. Hock Tan, Avago President and CEO, was named CEO of the new combined company. Dr. Samueli became Chief Technology Officer and member of the combined company's board, and Dr. Nicholas serves in a strategic advisory role within the new company.
The new merged entity was initially named Broadcom Limited but inherits the ticker symbol AVGO. The BRCM ticker symbol was retired.
From Wikipedia’s article on Broadcom Corporation, shared under CC BY-SA 4.0.5