Business Enterprise Segments, Significant Customer and Geographical Information

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Business Enterprise Segments, Significant Customer and Geographical Information

Business Enterprise Segments, Significant Customer and Geographical Information

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 Infrastructure & Networking (Infrastructure). Our Chief Executive Officer, who is our chief operating decision maker, or CODM, reviews financial information at the reportable segment level.

Our net revenue is generated principally from sales of integrated circuit products, the income we receive from our agreement with Qualcomm and licensing revenue. While we derive some revenue from other sources, that revenue is not material as it represents approximately 1% of our total net revenue. Such revenue is classified under product revenue for reporting purposes. We group our net revenue consistent with our three target markets which comprise our reportable segments, as discussed above.

With respect to the sales of integrated circuit products, we have approximately 600 products that are grouped into approximately 60 product lines. We have concluded that these products constitute a group of similar products within each reportable segment in each of the following respects:

• the integrated circuits marketed by each of our reportable segments are sold to one type of customer: manufacturers of wired and wireless communications equipment, which incorporate our integrated circuits into their electronic products;

• the integrated circuits sold by each of our reportable segments use the same standard CMOS manufacturing processes; and

• all of our integrated circuits are sold through a centralized sales force and common wholesale distributors.

We also report an “All Other” category that primarily includes licensing revenue and income from the Qualcomm Agreement since it is 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, amortization of acquired inventory valuation step-up, 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 reviews reportable segment performance exclusive of these charges. Our CODM does not review information regarding total assets, interest income or income taxes on an operating segment basis. The accounting policies for segment reporting are the same as for Broadcom as a whole.

The following tables present details of our reportable segments and the “All Other” category:

	Reportable Segments
	Broadband Communications		Mobile & Wireless		Infrastructure & Networking		All Other			Consolidated
					(In millions)
Three Months Ended September 30, 2012
Net revenue	$	557	$	1,023	$	505	$	43		$	2,128
Operating income (loss)	131		157		140		(217		)	211
Three Months Ended September 30, 2011
Net revenue	$	526	$	942	$	437	$	52		$	1,957
Operating income (loss)	100		171		143		(144		)	270

	Reportable Segments
	Broadband Communications		Mobile & Wireless		Infrastructure & Networking		All Other			Consolidated
					(In millions)
Nine Months Ended September 30, 2012
Net revenue	$	1,594	$	2,798	$	1,391	$	143		$	5,926
Operating income (loss)	365		403		363		(718		)	413
Nine Months Ended September 30, 2011
Net revenue	$	1,529	$	2,608	$	1,276	$	156		$	5,569
Operating income (loss)	283		423		439		(471		)	674

Included in the “All Other” category:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
				(In millions)
Net revenue	$	43		$	52		$	143		$	156
Stock-based compensation	$	128		$	121		$	415		$	402
Amortization of purchased intangible assets	87			20			230			65
Amortization of acquired inventory valuation step-up	7			9			72			19
Impairments of long-lived assets	48			9			85			92
Settlement costs (gains)	(2		)	27			86			(23		)
Restructuring costs, net	2			17			6			17
Charitable contribution	—			—			—			25
Non recurring legal fees	—			—			—			25
Employer payroll tax on certain stock option exercises	4			—			8			5
Miscellaneous corporate allocation variances	(14		)	(7		)	(41		)	—
Total other operating costs and expenses	$	260		$	196		$	861		$	627
Total operating loss for the “All Other” category	$	(217	)	$	(144	)	$	(718	)	$	(471	)

Significant Customer and Geographical Information

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Five largest customers as a group	45.3	%	44.0	%	46.6	%	41.6	%

The geographical distribution of our shipments, as a percentage of product revenue was as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
China (exclusive of Hong Kong)	31.9	%	35.0	%	31.7	%	33.9	%
Hong Kong	27.9		26.8		26.8		26.6
Singapore, Taiwan, Thailand and Japan	28.0		23.1		27.8		23.9
United States	2.9		3.1		3.2		3.4
Europe	1.9		1.9		1.8		2.1
Other	7.4		10.1		8.7		10.1
	100.0	%	100.0	%	100.0	%	100.0	%