Broadcom Trims Q3 Outlook

Broadcom trimmed its financial guidance for Q3. Revenue is now expected to be flat to up slightly compared to second quarter 2004 revenue of $641 million. Broadcom's previous guidance was for third quarter revenue to be in the range of $673 million to $680 million, or up approximately 5% to 6% sequentially. The revised revenue guidance range still represents an increase of more than 50% over the $426 million revenue reported for the third quarter of 2003.



Broadcom said the revision in revenue guidance is attributable to "requests from certain customers that the delivery of previously scheduled orders be delayed into future periods due to excess inventory within the supply chain. While all four of Broadcom's business groups have been affected to some degree by this inventory rebalancing, the adjustments relate primarily to a limited number of customers within the Broadband Communications and Mobile & Wireless Business Groups. Specific product areas that have experienced weaker sales compared with the prior quarter include satellite and cable set-top box applications and cellular handsets, the latter particularly in the China market."



Additional information is available from Broadcom online. The company will host an investor conference call on September 13. http://www.broadcom.com

• In July, Broadcom reported record Q2 revenue of $641.3 million, an increase of 11.8% from the $573.4 million reported for the first quarter of 2004 and an increase of 69.7% from the $377.9 million reported for the second quarter of 2003. Net income (GAAP) was $63.8 million, or $.18 per share (diluted), compared with GAAP net income of $39.9 million, or $.12 per share (diluted), for the first quarter of 2004. Q2 2004 also marked the company's twelfth consecutive quarter of revenue increases. The strongest revenue growth on a sequential basis was experienced in the company's broadband communications and enterprise networking businesses.

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Microsoft Signs OEMs for Windows CE IP Set-top Boxes.

Microsoft announced that eight additional original equipment manufacturers (OEMs) will use Windows CE to power their IP set-top boxes. Specifically, AboCom Systems Inc., Akimbo Systems, Bast Inc., Dave Networks Inc., Handan BroadInfoCom, Humax Co. Ltd., ImpressTek and TCL International Holdings Ltd. Device have selected Windows CE to power their new lines of set-top boxes. These new Windows CE partners are in addition to leading vendors Biostar Microtech Int'l Corp., Broadband Networks Inc., Costron Corp., Pace Micro Technology plc, Samsung Electronics Co. Ltd., Tcom&dtvro Co. Ltd and Thomson. Additional examples of deployment include Handan's Zenega brand, which was selected by T-Online in Germany, and Tcom&dtvro Co. Ltd., which has deployed more than 150,000 units in a hotel chain in Japan.



Microsoft said the chief advantages of using Windows CE in a set-top box includes easier customization, remote management capabilities, the option to add new applications and services to boxes in the field, a rich multimedia experience for users, native support for the Windows Media 9 Series Codecs and DRM.



The company noted that the standardization of Windows Media Video 9 into the VC-1 video codec standard (formerly VC-9) is now being considered for ballot as a Final Committee Draft (FCD) with SMPTE's C-24 group and has received acceptance by the Blu-ray Disc Association and the DVD Forum's HD DVD. Microsoft is a founding member of Advanced Access Content System, an organization defining the next-generation copy protection for HD content in optical media. http://www.microsoft.com/

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Microsoft and Thomson Announce IPTV-Ready Set-Top Box

Microsoft and Thomson announced the availability of an IPTV-ready set-top box for the Microsoft TV IPTV platform. The set-top boxes use Windows CE embedded technology, along with an Intel Pentium III processor running at 933 MHZ and the Intel 830M4 graphics chipset. It supports current and next-generation video codecs including MPEG-2, MPEG-4 Part 2, Windows Media 9 Series, and MPEG-4 Part 10 AVC (H.264/JVT).



The Thomson IP1001 and the RCA IP1000 set-top boxes are now available for all Microsoft TV IPTV trial customers, including Bell Canada, Reliance Infocomm Ltd., SBC Communications Inc. and Swisscom/Bluewin. Switzerland-based Bluewin is the first customer to conduct a market trial of the Microsoft TV IPTV platform and is deploying the Thomson set-top boxes in the trial. http://www.microsoft.com/tvhttp://www.thomson.net

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Microsoft and TANDBERG Integrate Encoder with IPTV Platform

TANDBERG Televison has integrated its EN5920 encoder with the Microsoft IPTV platform for enabling live broadcast channels over broadband connections. The companies said this is the first availability of real-time Windows Media Video 9 Advanced Profile hardware encoding for IP-based digital television services using the Microsoft TV IPTV platform.



The TANDBERG Television encoder and Microsoft TV IPTV platform support the Windows Media Video 9 Advanced Profile codec, enabling lower data rates while maintaining broadcast-quality video. The companies said the platform supports live broadcast channels "at a fraction of the data rates required for MPEG-2, while maintaining the same video quality."



Microsoft TV and TANDBERG Television are conducting technical trials of their integrated solution with broadband operators in Asia Pacific, Europe and North America, and expect volume deployments to begin in early 2005. http://www.tandbergtv.comhttp://www.microsoft.com/tv

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Telecom Italia Trials IPTV Services With Microsoft

Telecom Italia will begin testing the Microsoft IPTV platform. The Microsoft TV IPTV platform enables broadband network operators to deliver high-quality video content and services using existing and next-generation networks. The platform enables the secure delivery of pay-TV services, including standard- and high-definition channels, on-demand programming, digital video recording, and interactive program guides. The platform also offers enhanced features including instant channel changing and picture-in-picture functionality using multiple video streams.



Bell Canada, Reliance Infocomm, SBC Communications, and Swisscom/Bluewin are among the other service providers with announced Microsoft IPTV trials planned or underway. http://www.microsoft.com/tv

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Cisco to Acquire NetSolve for Remote Network Monitoring

Cisco Systems agreed to acquire NetSolve, a provider of remote network and IT infrastructure management services for businesses, for a fixed price per share of $11 for all outstanding shares of the publicly-traded company (representing a value of approximately $128 million, minus the $40 million in cash currently held by NetSolve). Under the deal, Cisco will also assume certain outstanding options of NetSolve, which will be converted to Cisco options.



NetSolve's core services include the monitoring and management of IP communications networks, security software and devices, WANs and LANs. In addition, NetSolve offers a secure, web-based portal to give customers and partners real-time visibility of their IT infrastructure.



The companies said NetSolve's services would enable Cisco and its channel partners to offer customers real-time monitoring of Cisco products and help ensure continuous, secure operation of advanced IP services such as IP telephony and security. Cisco plans to offer these services to its partners via a resale model, a wholesale Application Service Provider (ASP) model, or via its Advanced Technology Partner program. http://www.cisco.com

• NetSolve was founded in 1987, went public in 1999 and has 292 employees. The company is based in Austin, Texas.



• For its fiscal quarter ended June 30, 2004, NetSolve reported revenue of $10.1 million, compared to $10.4 million for the prior quarter. The decline was anticipated due to reduced carrier business, related specifically to the substantial completion of the transition under the AT&T managed router services contract to AT&T internal centers in the prior quarter. Recurring management revenues from the core business at the end of the quarter grew 10% over the end of the prior quarter and 18% over the end of the same quarter a year ago. Orders from the company's core business represented 91% of the total orders during the quarter. Operating loss for the quarter was $674,000 as compared with an operating loss of $555,000 in the same quarter a year ago and $308,000 last quarter.



• Cisco's other acquisitions in 2004 have included:
  
  
  
  P-Cube, a developer of IP service control platforms, for approximately $200 million in cash and options.
  
  
  
  Procket, a developer of concurrent services routers with expertise in silicon and software development, for approximately $89 million in cash.
  
  
  
  Parc Technologies, a spin off from a renowned center for research into search algorithms based at Imperial College, University of London, for $9 million. Parc's Route Server algorithms address network routing problems involving complex Quality of Service constraints.
  
  
  
  Actona Technologies, a start-up developing software that facilitates data management across geographically distributed offices, for approximately $82 million in cash.
  
  
  
  Riverhead Networks, a start-up offering security technology that protects against Distributed Denial of Service ("DDoS") attacks and other security threats in enterprise and service provider networks, for approximately $39 million in cash.
  
  
  
  Twingo Systems, a start-up developing desktop security solutions for Secure Socket Layer (SSL) Virtual Private Networks (VPNs), for approximately $5 million in cash.

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