Broadcom Receives Second Nasdaq Notice

By Colleen Taylor -- 11/17/2006

The stock options related hassles have not let up for the beleaguered Broadcom Corp., which has been embroiled in the industry-wide backdating controversy for months.

Broadcom announced this week that it has received a second staff determination notice from the Nasdaq stock market, related to the delayed filing of a quarterly report on the Securities and Exchange Commission's (SEC) Form 10-Q for the quarter ended September 30.

Broadcom was first chastised for another delayed filing in August.

The filings have been held up by an internal investigation of Broadcom's stock options granting practices that turned up evidence of backdating. Broadcom has said that the company's financial statements for the years 2000 through 2005 and for Q1 2006 will need to be restated; the errors will cause the company to incur a staggering $1.5 billion, at least, in additional non-cash stock-based compensation expenses.

 The additional staff determination, which the company said it expected, provides that the delayed filing of the Form 10-Q for the quarter ended September 30 could serve as an additional basis for potential delisting of the company's Class A common stock.  However, since the possibility of a delayed filing of the Form 10-Q was previously discussed with the Nasdaq listing qualifications panel, Broadcom said it does not expect that the delayed filing will affect its continued listing on the Nasdaq global select market.

Earlier this month, the panel ruled that Broadcom's stock would continue to be listed, subject to the following conditions: on or before January 7, 2007, the company must submit additional information to Nasdaq regarding the company's internal review of its historical equity award practices and related accounting; and on or before January 31, 2007, the company must file with the SEC its delayed Q2 quarterly report on Form 10-Q, and all necessary restatements of its prior financial statements.

The company first came under investigation by the SEC in June after Merrill Lynch identified Broadcom as one of six companies that it noticed had displayed suspicious stock options grants and pricing.

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