OK, so all that glitters may not be gold. Semiconductor designer Broadcom (NASDAQ:BRCM) just laid a heavy hand on a semiconductor industry that had been frolicking in delicious reports from the likes of Intel (NASDAQ:INTC) and Texas Instruments (NYSE:TXN) this earnings season.

Broadcom's sales total of $1.04 billion did impress me, landing 22% above the previous quarter and a scant 13% below the pre-crash 2008 quarter. But earnings took an abrupt dive to $0.03 per share. Sure, it's better than last quarter's $0.19 loss per share, but many of Broadcom's peers are keeping their GAAP noses a bit higher above water at the moment. Atheros (NASDAQ:ATHR), for example, is making a killing on next-generation wireless networking products.

So why is Broadcom lagging behind the competition right now? The company should actually be doing better than most, thanks to a sizable and sustainable new income stream from a licensing tussle with rival Qualcomm (NASDAQ:QCOM) that added a $65 million one-time settlement check this quarter along with $67 million of license payments.

Also, Broadcom counts several proven performers among its largest customers. Apple (NASDAQ:AAPL) has already shown us some muscle, and I expect more good news from Cisco (NASDAQ:CSCO) next week.

Some amount of the sluggish net income could even be attributed to creative accounting magic to keep taxable income down. I say this because Broadcom also reported $314 million in free cash flow, up from $224 million a year ago. Also, the $65 million settlement gain seems to be virtually netted out by a $50 million charitable contribution.

So Broadcom's stock is down today, but the business actually looks very healthy if you scrape a bit below the surface. I say it's a fine business available at a discount. Do you agree, or does Broadcom deserve the beating it's taking today? Let me know in the comments box below.

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