Communications-chip maker Broadcom (NASDAQ:BRCM) will check in with its second-quarter 2007 earnings on Thursday. Ahead of the release, we'll take a look at what expectations await.

What analysts say:

  • Buy, sell, or waffle? Of the 28 analysts with an opinion on Broadcom, 18 have a buy rating on the company, eight say hold, and two say sell. Broadcom also holds a three-star rating (out of five) with more than 380 opinions in the Motley Fool CAPS community.
  • Revenue. On average, analysts predict quarterly revenue to fall 4.3% to $901 million compared with the same quarter last year.
  • Earnings. Profits are predicted to drop 25% to $0.27 per share.

What management says:
CEO Scott McGregor gave investors a chilly message a few months back, when he stated: "Mixed outlooks from a few of our larger customers are causing a lower than normal level of visibility into our near-term results." Nonetheless, McGregor remained "optimistic regarding our prospects for the second half of the year." But with other companies in Broadcom's calling circle -- such as Texas Instruments (NYSE:TXN) -- giving more upbeat near-term prospects, investors took little comfort in the company's silence on its outlook for this quarter.

What management does:
Since its last quarterly earnings report, management has been coy about giving details on how business is progressing. Margins, however, send a pretty clear message to investors: The business fundamentals are struggling under the weight of expenses for items such as stock options, research and development, and acquisitions.

Margin

12/05

3/06

6/06

9/06

12/06

03/07

Gross

53.1%

53.2%

52.6%

52%

52%

51/8%

Operating

20.4%

22%

21.7%

21.4%

19.6%

17.9%

Net

13.7%

13.9%

15.8%

14.6%

10.3%

8.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Though the numbers paint a pretty dismal story, there's been plenty of success at Broadcom. Design victories in some overhyped products such as the Apple (NASDAQ:AAPL) iPhone and other diverse products from top-tier companies such as IBM (NYSE:IBM) and Echostar (NASDAQ:DISH) show that Broadcom's products are on the mark with customers. And the company successfully argued for and was awarded a ban on certain Qualcomm (NASDAQ:QCOM) products that infringe on a Broadcom patent.

But accurate timing of certain customer product cycles seems to be eluding the company. One of Broadcom's largest customers, Motorola (NYSE:MOT), again cut its forecast for handset sales and issued a bleak outlook for the balance of the year. These problems may jump up and bite Broadcom as it did RF Micro earlier in the year. And though the pressure is on Qualcomm, the company is still pressing for a veto of the ITC decision rather than giving in to Broadcom's licensing demands.

So the jury is still out on just how good or bad Broadcom's quarter will be. With so many fluid events within the company and in the industry, few in the media are venturing to guess, including this Fool. We'll just have to wait to hear what the company says -- and, more importantly, what the numbers show.

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Fool contributor Dave Mock is clearly limited in his visibility of mixed outlooks. He owns shares of Motorola and Qualcomm. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy is clear as crystal.