Scott McGregor - President and Chief Executive Officer Henry Samueli - Chief Technical Officer and Co Founder Eric Brandt - Chief Financial Officer Peter Andrew - Vice President of Corporate Communications

Craig Ellis - Citi James Schneider - Goldmann Sachs Ross Seymore - Deutsche Banc Shawn Webster - J.P. Morgan Daniel Berenbaum - Caris & Company Adam Benjamin - Jefferies and Company Srini Pajjuri - Merrill Lynch Cody Acre - Stifel Nicolaus Tim Luke - Lehman Brothers Krishna Shankar - JMP Securities Sumit Dhanda - Banc of America Securities Craig Berger - FBR Capitals Uche Orji - UBS Ruben Roy - Pacific Crest Securities

Welcome to Broadcom's First Quarter and Year 2008 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct the question-and-answer session. As a reminder, this conference is being recorded Tuesday April 22, 2008. Your speakers for today are Scott McGregor, Broadcom's President and Chief Executive Officer; Henry Samueli, Broadcom's Chief Technical Officer and Co Founder, Eric Brandt, Broadcom's Chief Financial Officer and Peter Andrew Vice President of Corporate Communications. I would now like to turn the conference over to Mr. Andrew. Please go ahead. Peter Andrew - Vice President of Corporate Communications: Thank you, Kristine. During this call, we will discuss some factors that are likely to influence our business going forward. These forward-looking statements include guidance we will provide on future revenue, gross margin, and operating expense targets for the second quarter of 2008 and any other future periods and statements about the prospects for our various businesses, market share and the development status and planned availability of new products. You should know that the guidance we provide today is based upon forecast that require us to make certain estimates, judgments and assumptions using the information that is available to us at this time. It should be clearly understood that our actual performance and financial results may differ substantially from the forecast and the other forward-looking statements we make today. Specific factors that may affect our business and future results include: among other things, general economic conditions the markets we address, and the market we address are discussed in the Risk Factors section of our Annual Report on Form 10-K for 2007 and subsequent SEC filings. A partial list of these important risk factors is set forth at the end of today’s earnings press release. As always, we undertake no obligation to revise or update publicly any forward-looking statement except as required by law. In accordance, with SEC regulations G please refer to the Investor Section of our website at www.broadcom.com for a reconciliation of non-GAAP financial information discussed in this call. As well the additional historical and financial and statistical information. With that, let me now turn the call over to Scott. Scott McGregor - President and Chief Executive Officer: Good afternoon and thanks for joining us today. I am pleased to report that Broadcom's results in the first quarter were quite strong and came in quite a bit better than we were anticipating due to strong demand within the enterprise networking and Broadcom Communication markets. We had record revenue in the first quarter of $1.03 billion up slightly from Q4. We generated 239 million in cash flow from operations and we repurchased $392 million worth of Broadcom's shares during the first quarter. The strength in revenue that we experienced was driven by the wireline portion of our business. Our enterprise networking and broadband communications businesses participate in a number of very large and well established end-markets that tend to experience strength in the first half of the year as capital spending budgets for the year are released. And these have been stronger than we anticipated. Despite the current economic headlines, we are not presently seeing any broad-based weakness. Our order trends remained strong throughout the first quarter and we expect continued growth in the second quarter. Key topics we'll cover in our call today include; the first quarter performance. As noted it was a strong quarter with record revenue and strong cash flow from operations. Second, our order trends throughout the first quarter. Third, our operating expense control. We've shown that when we focus on something, we can have a positive outcome. Four increase economic transparency and openness. Eric will talk more about our migration to GAAP only financials along with an analysis of our spending and business results; and finally, an update on our major target end markets with a specific discussion on our cellular business. I'll now turn the call over to Eric to talk more about our results in the first quarter and the second quarter guidance. Eric Brandt - Chief Financial Officer: Thanks Scott. This quarter, we will discuss GAAP earnings and provide all of the elements we've provided in the past such as those who run GAAP models and those who run non-GAAP models will continue to have all the relevant information. We are making this transition for a number reasons; first, we believe that our stock-based compensation expense has begun to stabilize within a more predictable range. Secondly, to demonstrate our commitment to reducing stock-based compensation expense as the percentage of our overall cost structure in the future. Third, to help facilitate easier comparison across different industries. And finally, as a leader in the semiconductor industry, we believe now is the right time given the prevailing view with regards to conversion to GAAP-oriented disclosure. Based on the fact that the guidance provided last quarter was on a non-GAAP basis and that I will endeavor to make a bridge to this on this call, my comments will be somewhat more detailed and hence longer than usual. Moving to the financial overview, we are pleased with our Q1 results. To summarize, record revenue of $1.032 billion including $35.6 million in revenue from Verizon was up 5 million or roughly 0.5% from Q4 2007 and 15% form a year ago and was well above the upper end of the range provided on our Q4 earnings call. GAAP gross margin was 53.4% up about 90 basis points from last quarter. Included in this number are the positive affect of the Verizon royalty of 170 basis points and a negative effect of stock-based compensation and amortization of purchased intangibles of 90 basis points. Total GAAP operating expense increased by 12 million over Q4. However, as noted in the press release there were a number of one-time/acquisition-related elements, which I will detail in a moment. GAAP earnings per share were $0.14. One-time and acquisition-related items represented approximately a $0.04 shift in the quarter. Excluding these one-time acquisition-related items Broadcom experienced EPS growth of roughly 38% over the prior year. Stock-based compensation in the quarter were $130 million or roughly $0.21 of earnings. Of which, approximately 79 million or 7.6 points of revenue was in R&D, 29 million or 2.8 points of revenue in SG&A, and 5 million or 0.5 points of revenue in cost of goods sold. Cash flow from operations is strong $239 million. Our cash and marketable securities on hand declined for the quarter and stood at $2.2 billion, driven down primarily by $392 million in share repurchases settled in the quarter. Moving to revenue and gross margin. In January we said that we expected Q1 revenue could be approximately 975 million to 1.005 billion assuming a $35 million royalty from Verizon earned in the quarter. We said, we expected our mobile and wireless business to be seasonally down due to the consumer nature of that business and that both broadband communications and enterprise networking would be roughly flat. What occurred in Q1 was solid growth in both broadband communications and enterprise networking, somewhat offset by the anticipated seasonal decline in mobile and wireless yielding much better revenue than anticipated. With respect to broadband communication market, the revenue increase was principally driven by a bounce back within our satellite set-top box line of business as well as growth in broadband modems. In the mobile and wireless business, as anticipated, we experienced seasonal decline in Bluetooth, wireless LAN, and mobile multimedia products. In addition, we have included in this business the $35.6 million in Verizon royalties in the first quarter. In our enterprise networks business grew in Q1, principally driven by continued solid growth in switching offset somewhat by the expected fall in Gigabit Ethernet Controllers. Please note that we define switching as switches plus software and price whether they are optical or copper. Revenue distribution in Q1 was as follows: Broadband communications was 35% of total revenue. Mobile and wireless, which includes the Verizon royalty was 35% of revenue and enterprise networking accounted for 30% of revenue. Our GAAP gross margin increased 90 basis points to 53.4%, which was mostly driven by positive product mix. Moving to operating expenses. GAAP operating expenses were up 12 million from our Q4 levels. Included in this amount are the negative effects of settlement charges of $16 million, 12 million of which relates to today's announced settlement with the SEC and in process R&D of $11 million related to our acquisition of Sunext Design offset by the positive effects of an $8.5 million payment from Qualcomm for reimbursement of legal expenses in the San Diego case that lowered our SG&A amounts reported in the quarter. This totaled to a negative effect of roughly $18 million in Q1. However, we also benefited from a $17 million sequential decrease in stock-based compensation and associated payroll tax expense. On a comparable basis to the guidance provided in January, assuming we include the non-recurring $8.5 million payment from Qualcomm with the other non-recurring expenses, operating expenses increased by roughly $11 million, which was below the guidance of 13 to $18 million. While we were able to keep the operating expense growth tighter than we expected in Q1 and also back in Q4, 2007 due an increased focused on cost, the timing of certain expenses may continue to vary quarterly due to the inherent lumpiness of certain discretionary cost such as legal expenses, tapeouts et cetera. R&D as a percentage of sales on a GAAP basis was 34.5% and decreased approximately 90 basis points. Included in this number, as I mentioned is $79 million or roughly 7.6 points of stock-based compensation expense. We continue to operate above our previously communicated long-term targeted R&D range, adding back stock-based compensation as a percentage of sales while we invest to deliver on recent design wins in a number of our emerging businesses. We increased total company headcount in Q1 by 171 people including 20 from Sunext Design to a worldwide headcount of 6518 people, approximately 74% of which are in engineering. Moving to the balance sheet, as I mentioned earlier total cash and marketable securities were down slightly at $2.2 billion, as we generated very strong positive cash flow from operations of $239 million offset principally by our share repurchase program. Inventory decreased in Q1 by approximately $10 million to $221 million. GAAP inventory turns remained a very strong 8.7 times in Q1. Our accounts receivable day sales outstanding decreased from 33 days to a record 32 days driven by good linearity. We continue to believe the DSOs will return to normal levels at sometime during 2008. As previously announced last November a new $1 billion share repurchase program was approved by the Board of Directors. The company repurchased approximately 20 million shares at a cost of roughly $400 million in Q1. On a GAAP basis there were 540 million diluted shares outstanding at the end of Q1 2008, a level not seen since Q1 2005. Moving to expectations, we currently expect solid growth in Q2 with total revenue in the range of $1.075 billion to $1.125 billion. The mid point of which is an excess of 20% revenue growth over Q2 2007. And looking what we expect to happen in Q2, in broadband communications we expect strong growth driven by growth across virtually all product lines. In addition we anticipate significant strength in the cable set-top box area driven by timing of a particular customers deployment. In mobile and wireless, we anticipate returning to growth has Bluetooth and wireless LAN rebound from their typical Q1 seasonal decline. Our enterprise networking business should go modestly as we expect continued growth in the switching area offset somewhat by the expected declining in GigE controllers. For GAAP gross margin in Q2, we expect to see a slight decline in gross margin driven by product mix and the ramp of a number of new products to new and existing customers in the quarter. Just to repeat what we've said in the past, typically our newly introduced produced have lower gross margins as we focused designs initially for quick time to market. With the respect to GAAP operating expenses, I would like to separate the discretionary element from the annual Q2 fixed or one time step ups. I think its useful to make this distinction to increase the transparency into the choices we are making as a management team. As a reflex management action, I will start with discretionary cost. Based on the efforts today, we are providing the same discretionary operating expense ranges Q1 of 13 to $18 million. We have been fortunate to do better than our guidance for OpEx growth in Q4, 2007 in Q1 of this year and we will work hard to do the same in Q2. We are trying to be somewhat conservative, because as I mentioned earlier in my comments, while I think we have made great progress in tightening our cost focus, processes and decision making we are not yet strong on projecting the exact timing of certain lumpy costs such as legal cost, and mass costs et cetera. Moving to the more fixed items, there are two ignored. The first is the impact of our annual employee reviews/married increase process, which I mentioned on last call is right in line with our projection of $12 million. Since we are using GAAP you will also need to include the stock-based compensations step up due to the grant of new equity awards in Q2 in connection with those process. We anticipate this will be around 9 to $11 million. Since we haven't spent a lot of time in the past to help your modeling on stock based compensation expense. It normally steps up in Q2 of each year due to the new grants made mid quarter as well as in Q3 for a full quarter effect then drifts down in Q4 and Q1. As I mentioned at the beginning of my comments, net of significant stock price movement we believe this annual cost has become more stable. The second one time step up in Q2 is a $1 million due to the impact of Sunext Design acquisition rolling on to our P&L. Finally, please remember as part of our comments on Q1, we adjusted the GAAP operating expense numbers for one time elements that added roughly $18 million to Q1 OpEx, when you are building your Q2 models in order to get to an apples-to-apples comparison. Cash flow from operations for Q2 is expected to remain strong and we anticipate that we'll continue to repurchase shares in Q2. Approximately $443 million remaining on our current buy back program at the end of Q1. And now I would like to turn the call back over to Scott to talk about the state of the business. Scott McGregor - President and Chief Executive Officer: Thanks Eric. Broadcom's overall revenue growth in the first quarter was driven by strength within our wireline oriented businesses and more specifically our enterprise networking and broadband communications businesses. Revenue attributable to the enterprise networking market grew by 5% sequentially and hit a record revenue in the first quarter. This increase was driven by solid growth in switching and broadband processors offset somewhat by our client Gigabit Ethernet Controller business. Our enterprise networking businesses is one that I think many investors have overly discounted. Over the last few years revenue from the enterprise networking market has been relatively flat due to products mix issues. However, revenue grew nicely in the first quarter and has the potential to continue to grow in the future. This potential growth is expected to be driven by demand from our switching products. And as Eric said remember by switching we mean that it includes the switchers themselves as well as the files are physical errors which includes corporate optical. We also see growth in Metro and small or medium size business are SMB network, switching us now large enough to pull the entire business. We talked about the anticipated fall off in the enterprise client gigabit Ethernet controller business for PC and notebooks for a few fee quarters now and our current view remains unchanged. Please note that we continue to have a strong position within the gigabit Ethernet controllers base for severs and strengthen this segment has offset some of the decline that we originally anticipated to experience in the Enterprise controller area. With respect to our swathing business, switching revenue as defined earlier was strong in the first quarter driven by growth and the service provider in SMB segments. While Enterprise switching market can be characterizes steady. In total, switching revenues was up in a higher single digit on a sequential basis and up over 10% year-over-year. We experience growth at all speeds within switching. Fast Ethernet, Gigabit Ethernet and 10 Gig Ethernet. We expect another strong quarter of growth in the second quarter from our switching business. As I mentioned earlier, the key longer term divers per growth within enterprise networking will be the adoption of Ethernet switching into the metro market, in such applications DSLAMS CMTS and 3G-based stations, and finally market share gains within the SMB segment. You will hear more news regarding our enterprise networking products next quick at the Interrupt Conference. Moving onto broadband communications, revenue in the first quarter also came in better than we anticipated driven mainly by the stronger set top box and broadband modem revenue. What impressive here is the set top box and broadband motor markets are the first two product line that help Broadcom launched as company back in 1990’s. And yet even today, these in markets continue to evolve and grow. In the first quarter, we experienced rebounding our sales into the satellite set top box market and continued share expansions and revenue growth within a cable TV, Telco TV and IP set top box markets. Within the set top box market Broadcom has the product breadth and scale necessary to continue to grow in investing our satellite cable and IP set top box product lines, while funding our entrance into the other synergistic end markets such as Blue ray Disk, Digital TV and analog converter box end markets. These leverages are strong MPEG technology position. The first quarter is typically the busiest quarter from a broadband communications products announcement prospective given the consumer electronic street show in the United State and the CCBN conference in China. And this year was no exception. A few of the more important announcements were followings: The introduction of a 65 nanometers single cheap HT and PVR enable satellite set top box solution, that will unable high performance cost to optimize setup box implementations. Second, collaboration between Microsoft and BroadCom to develop the next generation a high performance media roam IP setup boxes. Third, the announcement of a 65 nanometers single cheap high definition setup box solution supporting Chinas new AVF compression standards. And fourth, our strategic relationship with Core Ship to bring the first high definitions PVR set up box solutions to the Chinese pay TV market. The transaction to the HD and adoption of PVR is now a worldwide phenomenon. As Eric mentioned we were in the stronger portion of the cycle with robust first half order flows. In addition, we are experiencing an usually large ordering patterns by some cable and Telco TV operators that will likely cause some near term fluctuations in our quarterly revenue trends in the cable set top box line of business. We are looking for a very strong second quarter performance for our set top box business. With respect to broadband modems, we experienced growth in Q1 mainly driven by our DSL product lines. The good news here is that the growth within DSL area was driven by the migration to high end modems incorporating voice, as well as growth and share and expansion in our DSL Central office business. We also experience increased port shipments of end-to-end VDSL solution because market is still under delinquency with respect to mass deployment worldwide primarily for Telco TV applications. Highlighting our diverse products offerings and Broadband modems, as we look into Q2, we believe that much of the growth in our broadband modem area will be driven by our cable modem products. We expect strong demand for broadband modems in the second quarter driven mainly by continued interest in our DOCSIS 2.0 data and voice products and our multi channel or what some MSO’s are calling White Band solutions. We are bullish on the migration to DOCSIS 3.0 over the longer term, but in the near term we are seeing MSO’s rollout White Band cable modem offerings to utilized the existing DOCSIS 2.0 infrastructures while supporting multiple downstream channels needed to compete with 100 megabit data services offer by Telco’s Other significant news in the quarter included the following. The acquisition of Sunext Design which brings to market a highly integrated back and front-end solution helping to accelerate the adoption of Blue ray Disc players and recorders, and RCA rolling out a new line of digital analog converter boxes in support of the NTIA's coupon program. With respect to the mobile and wireless market, revenue was down in the first quarter as we would expect it due to normal seasonal weakness in our bluetooth and wireless LAN business offset by growth in GPS products due to continued strong unit demand. Moving to our cellular business, we remained focused on engineering execution in our 2.5 and 3G wins with the top two cellular handset makers. I would like to spend a few minutes talking about our overall goals for the cellular phone segment which include technology leadership, customer engagement, and a revenue and market share level large enough to create a sustainable business. We established these goals a couple of years ago to underscore that we are very serious about the cellular and portable products market with the intent to become a significant player with critical mass. At that time, our goals had to be top-down and aspirational as we were early in our roadmap. As we move further along in our development schedules, we are now working with our customers to plan the handset models that will ship in 2009 and beyond and we are transitioning from top-down goals to real-world operational build plans. This is a positive step in the right direction regarding our progress in the cellular market. We remain committed to achieving our goal of becoming a significant player in the cellular market supported by our strong product and customer traction today. In fact we have already delivered on the first two of the three goals I just mentioned. We have one of the industries' most exciting product roadmaps including world-class 2G and 3G cellular basebands with integrated RF, mobile multimedia, bluetooth, wireless LAN, GPS, and power management. We also have meaningful design wins with the top two handset players. However, I feel it is no longer productive to comment on the timing of our future market share for two reasons. First, our share will be highly dependent on the roll out schedules agreed upon between the handset makers and the cellular carriers and on the popularity and success of the models themselves, factors over which we have little control and which cannot be reasonably predicted. The second reason is that to give market share guidance at this point would require us to implicitly share the launch plans of our customers which of course we cannot do. So, going forward we will therefore leave it to third party analysts to measure and predict our market share as we do with the rest of our business. Having said this, I do think it is appropriate to make some comment on our third goal of target revenue and market share, one last time particularly with respect to the timing of that goal. As the acting General Manager of the cellular group, I have had the opportunity to dig in the products and customer programs over the last month. As I mentioned, our success in product execution, our technology and customer traction have been impressive even to many of the news readers. However, based on the current miles of you I now believe it will take us longer than originally anticipated to reach our aspirational goal of 10 to 15% market share. We are not projecting a new date because when and if we achieve our goal will depend on many factors, only some of which are in our control. Now that been said, we continue to work closely with Nokia on EDGE. The program is on track and we are not aware of any changes since our last earnings call. Likewise, we also continue to work closely with Samsung on deploying new 3G phones. We are focussed on building great products, working with the right customers, and capturing market share. I am also pleased to announce that, effective immediately, Scott DO will become Senior Vice President and General Manager of our Mobile Platforms Group. Scott, who joined Broadcom nearly eight years ago, has been in the wireless business for over 20 years. He and his team are responsible for our success in bluetooth which has been one of Broadcom's fastest growing businesses and is also now our largest line of business. Scott brings to MPG a strong focus on execution and has excellent customer relationships with the key handset makers. Moving on to our other wireless businesses, our GPS business grew nicely in the quarter due to a strong unit demand within the PND market. Just recently a top five cell phone manufacturer began shipping products in the US incorporating our GPS products. We are working hard to grow our standalone GPS and other converged communication product offerings in to the PND space and to drive additional GPS penetration into the cellular phone market which we'll talk about more later this year. In bluetooth, revenue was down slightly in the first quarter due to normal seasonal trends associated with these more consumer-oriented end products. As we look into Q2, we expect to generate strong sequential revenue growth in bluetooth driven by broad-based growth within all segments of the bluetooth market including cellular, PC, embedded in the audio segment. We’re also pleased to announce that we received orders from multiple Tier-1 vendors for our mono headset products and believe to you will be our see a nights ramp for Broadcom products into this new segment toward 2008. Wireless LAN also is down in the quarter driven by the normal seasonal parents within this product area. In the wireless LAN group we did experience continued growth with in the error 2011N category as revenue grew over 20% quarter-over-quarter. We try to drive growth in the N category of the market by attacking the market from two different directions. First, to help lower the cost of adopting error 802.11 N into more devices will begin shipping 802.11N product later in Q2. Secondly, we will shortly be issuing a press release, during our deep tailing our entrance into the enterprise e wireless LAN market which creates opportunities for us supply solutions into this high growth segment. By combining our 65 nanometer 802.11N and wireless LAN product with our fax past software, and tying it into existing switch infrastructure. We’re delivering an end-to-end solution taking unify accompanies wired and wireless networks. As we noted a few quarters ago we’re seeing a high degree of customer interest in our converged communications products, where we combine Bluetooth, GPS, wireless LAN and other devices in a variety of different ways. We’ve been in mass production with our Bluetooth process impark for sometime and with already shift over 75 million units. Well our competition is store working unshipping network products. The next stage of this conversion sub communications is about to happen as we already studied production wafers for our triple play part that combines Bluetooth, FM and wireless LAN all in a single 65 nanometer Die. Not only where you’re able to integrate this three radios under a single die and enable them to all operate to concurrently is also been recognized for our ability to integrate the power amplifiers on to the same die and deliver over 20 DBMF power. We’re able to offer higher level of functionality with best in class performance cost in size. Portable electronics products incorporating this solution should be in the market in the second half of this year. Also this product for which we internally call the Broadcom 43-25 was recently awarded the EDN Annual Innovation Award within the category of networking and communication IC's. As we begin shipping these converged communications products, you will likely see a stop talking about Bluetooth and wireless LAN as standalone product areas. As Erick mentioned earlier we anticipate that revenue from the overall mobile and wireless market will grow in the second quarter driven mainly by demand for our Bluetooth and wireless LAN products. Moving onto the legal fronts, Q1 was pre quite from our press release perspective but a lot when on behind the scenes. With respective to Qualcomm, as Eric mention earlier we did receive an $8.5 million check from Qualcomm for attorney fees and other expenses as schedule with their Litigation misconduct in San Diego. On March 5th, Judge Bruster will be the sanction attorney will be able to use Attorney client privilege communication with Qualcomm to defend their conduct. We should hear more about this in the coming months as the matter moves towards an evidential hearing. On March 18 the quarter refills rejected Qualcomm’s motion to stay in junction regarding their entrenchment three of our patterns in Santa Ana. Today through Thursday, we will be involved in the ITC enforce May hearings we covering our claims that Qualcomm is violating the commissions seizing the cyst order and what if f any additional forcemeat measures are appropriate. These claims revolve around the commission's finding of entrenchment of another Broadcom pattern in June 2007. We should have an initial determination from the ITC judge in late July. Finally, we are pleased to announce that earlier today the SEC's investigation into Broadcom's historical stock option granting and accounting practices has concluded with respect to the company. We now ready to take your questions. Christian may we have the first question, please?

Thank you. We will now begin the question and answer session. (Operator instructions) The first question comes from Craig Ellis from Citi. Please go ahead.

Thanks for taking the question and congratulations on the revenues. Scott the first question for you mentioned in comments on baseband, it will take long to get to the 10 to 15% share target the new and early expected. How do you think about R&D funding for Have you think about the R&D funding lend for that business relatives to the level that you had I think you’re around 850 engineers?

Craig, these are continued to be committed into that space. We think it's important in the portable market and we believe that we can get good traction going forward. In terms of the expense, we have moderated the expenses somewhat. We'll slow the rate of increase of those expenses, but we again have great traction with Nokia with Samsung, we have a variety of things in the total cellular platform including multimedia. I mention I think in an earlier call that we're excited about that product area and of course in the wireless space and so forth. So we see cellular as an overall platform and not just a base baseband market. And so, that’s why it’s very important to invest in there.

Okay and then on the product side as well, there were comments on the strength in the enterprise networking area on the switching side. To clarify that, is that more seasonal strength or are you seeing either a new customer or geographic strength that was unexpected in the first and the second quarter?

I think we've gained in that space. I mentioned on previous conference calls that we've had good design win traction, and this is some of that coming to fruition. We’ve been working hard on 65 nanometer products and our overall competitiveness in that space, and I would we've definitely improved in that area. We've also seen our footprint increase as we look to growing into metro space. You may recall we bought a level 7 and so, we have a larger software footprint in that space as well. And I also believe we've taken share especially in the SMB space.

Thank you. And then the last question I have is for Eric. Eric the expense control has been good the last two quarters. I think many of us thought that the expense growth would be modulating down towards 1 to 2% exceeding this year. Is that still a fair way to think about expenses a little bit longer term?

We continue to tighten up on our expense target. But we are discovering one of the things that’s interseting is one of the reasons why we were better in Q1 than we originally thought as. But you find that certain Q1 expenses sort of fall into Q2 and as they sort of sit in Q2 nobody willing to sort of take expenses out of Q2 and it l likely fall into Q3 or vice versa. Expenses in Q3 that might sort of slide into Q2. So the reason why I made the point about timing is its hard to figure out exactly which quarter these things are popping up in. So suffices to say that about a $11 million apples-to-apples growth, we're pretty pleased with our performance in Q1. We think we will do similar, we set a similar range for Q2 and we are hoping that will do better. As far as the back half of the year our hope is that in the back half of the year an aggregate that expenses will slow again. Trying to figure out whether there be in Q3 or Q4 is a little bit hard yet to get our arms around.

All right thanks guys.

Our next question comes from James Schneider from Goldmann Sachs. Please go ahead.

Hi good afternoon, thanks for taking my question. I just – first of all if you look if you look at the predicted ramp you have in revenues throughout the year. How do expect your gross margins to trend ex-of rise royalty?

While we said sort of toward the back part of last we though that excluding the horizon royalty we thought that we would be in the middle of our range of 50% to 52% so right around 51. Remember that in that number when you go to GAAP basis of about 90 basis points you have to take out of that number which relates stock based compensation and amortization intangible. I think we as we continue to ramp new product as I mentioned there tend to be lower margin because they are sort of dividing the time to market as opposed to cost and we’re still a little bit high up on the 65 nanometer cost we begin to drive that down. So I would say that I will continue to work with the guidance we’ve given historically in general for the company and we will provide more information as we sort of roll across the year, but we said for Q2 that we though it be down slightly quarter-to-quarter?

Thanks. And then in terms of a followup, can you give us a sense of the magnitude of the opportunity that bluetooths helps us represents for you, and in terms of 2008 revenue?

Well, in terms of shipment we do expect to begin shipping our bluetooth headsets to multiple Tier-1 manufactures really in the back half of this year. If you look at the 10 of this market its probably around an 80 to 100 million unit opportunity depending on whose data you look at. So I think you will see revenue from us in the back half of this year, but I think you will much more significant revenue in the 2009 timeframe.

From the comparative point of view though we have a very low market shares in that space. So that’s all share gain for us going into that market.

Thanks very much.

The next question comes from Ross Seymore from Deutsche Banc. Please go ahead.

Hi guys and congrats on the revenues as well. On the enterprise and networking side, I think, can you just talk little bit about the linearity, how is its surprise occurred and again, Scott, you mentioned that the volatility of that subset segment is been lower than most. So the surprise of this magnitude seems a bit odd.

Well I think we're seeing more infrastructures build out than we had expected, and I think that’s driving it. And as I also mentioned, we have two other factors going on. An increase in our overall footprint in the same for example, expansion in the metro area and the software space and again we did see some share gain. So it’s a combination of those things which made a little difficult to predict. But Peter you want to comment on?

Yeah just real quickly I was looking at the booking linearity by month within that group and there wasn't anything really, no significant deviation, it’s pretty strong throughout the quarter.

That kind of steady linearity also give you pretty good confidence that it did sustainable and we are not just seeing kind of a initial budget for us to start the year and then people kind of sees up?

Ross I would that the flatness we have seen in that business has been the surprise rather than the growth we're seeing now for me anyway. I think that we did expect to see that business grow because of the increase penetration of gigabit Ethernet as a general trend and overall infrastructure deployment. So I would expect that that business would continue to grow.

Great, and then one follow up question is on the handset side in general. It seems like the broad market unit growth rate is at least been a little slower on the high end where more bluetooth tends to exist. Have you guys seen any of the slowdown and from your bluetooth comments specifically it doesn't sound it should. We just conclude that you're continuing to gain share?

Yeah I think the fact that we are gaining share in that space overwhelms particular trade offs in the high end of the handset market versus the mid-range. But also I would observe that we are seeing bluetooth start to penetrate pretty well into the medium range of the handset markets. So that will go to maybe 50 or even more percents of the total handset market this year according to some of the analyst data I've seen . So the combination of continuing to gain share with our combo products starting to kick in bluetooth plus FM that’s made us very competitive in that space. I think that’s swamp phenomenon you are seeing.

Great. Congrats again.

The next question comes from Shawn Webster from J.P. Morgan. Please go ahead.

Yeah thank you for taking my question and congrats on the good quarter. Eric, can you run through the OpEx one more time just at the high level. If we take out the one timers but keep options in, what will your OpEx do sequentially in Q2?

You know I knew this is coming. Such is the nature of a change. Okay, so in Q1 there are three one timers. The three one timers at our account are the in process R&D at 11, the settlement charges at 16 and then the positive or expense reducing 8.5 payments from Qualcomm, that nets to $18 million which makes Q1 OpEx higher than it would otherwise be. In Q2 if you assume it, because we don't have any data to say any of that recurs in Q2 we just deal with the Q2 pieces. Again from a discretionary standpoint we are planing $13 to $18 million of growth size you know midpoint of that range $15-$16 million. I think everybody used 16 last time and we did about 11 in Q1 on a similar basis. You need to add to that two pieces, the first relates to the married increase annual married increase process which has a cash component and a 123 expense component. The cash component is exactly is forecasted at $12 million plus $9 to $11 million on stock based compensation, the reason why we give a range on that is we don't know exactly what the stock price will be when the option insure is grant, so somewhere in the vicinity of 9 to 11. So if you use 10 that’s 22 and then plus 1 for the fund that step up on the acquisition. So those are three pieces that I would add together in terms of what our expected step up is excluding any one time items which could occur in Q2.

Okay so the 22 plus the one plus 13 to 18 increases in discretionary is the sequential change in OpEx?

Correct.

Okay I think I got it. Thank you. Did you have any 10% customers in the quarter?

We don't disclose that anymore on a quarterly basis. We do disclose that on annual basis in our 10-K.

Okay. And in terms of the order or trends, I mean, you said that you're expecting growth in Q2. Can you rank which of your three segments will grow fastest?

No I don't think we will do that for now. But I did say we will see growth in all of them.

Okay thank you very much.

Next question comes from Daniel Berenbaum from Caris & Company. Please go ahead.

Yeah, hi. Thanks for taking my question. I was a little surprised at your commentary on the GPS side. It seems like a couple of the PND manufacturers have been talking about weakness in that market. Can you maybe give us a little color? Is it because you are gaining share there, because you are associated with the integrated solutions with the handset manufacturers more? Can you just help us understand that a little bit?

Yeah, it's a couple of factors. First of all, when I talk about weakness in the PND market, I think it was reducing the growth expectation from high double-digits to middle double-digits and so that was weakness. Now in most markets that would be considered strength, but again that has been a very hard market. For us, it's not only a market that has a great growth potential, but we are definitely taking share in that space. We've moved beyond some of the additional PND design wins we had into Tier-1 handset makers and in fact we are shipping with one in the United States now, GPS solution there. And we do expect to move into other handset makers and other devices as well. So, we see GPS as a product that has a bright future ahead of it with opportunity to take share in a variety of spaces.

Okay. And then just a quick question Eric on the pro forma and maybe it is in the press release and I missed it, but you initially give a share count for the pro forma excluding stock-based comp. I didn't see that in there. What would that have been?

We didn't provide that number. Let me do a round way to calculate, we can come back to you on that but it's in the 560 range I believe.

Okay.

Hang on, yeah excuse me. If you did that the old way, it's about 556, 557, but the right way to think about it is take the GAAP EPS of $0.14, add the $0.04 of one-timers to $0.18. Then add the $0.21 of stock-based compensation which gets you to $0.37. Penny overage associated with the lowest stock count on a GAAP basis and some tax adjustments, so that's how you would sort of -- if you are modeling on a non-GAAP basis, that's how you would get to a commensurate number.

Okay great thanks. That's helpful.

Your next question comes from Adam Benjamin from Jefferies and Company. Please go ahead.

Thanks guys. Scott, just a followup on the cellular comments you made. Obviously you don't want to talk about the share at this point but just to be clear you talked about that Nokia and Samsung are on target. Can you just remind us what do you mean by on target?

Well, we announced with Nokia that we had an EDGE program with them to do EDGE basebands for their handsets and what I do is -- I mean, since our last conference call nothing has changed there. I just wanted to make it clear, there were some people who were concerned that something had changed and I wanted to make that clear. We aren't aware of anything in that space. With Samsung, we've previously announced working on 3G with them. That continues. We're shipping with Samsung today in a variety of 3G handsets. They are more forecast for this year and beyond.

Okay. But at this point, you don't plan on giving any kind of target in terms of timing without a share number?

No Adam, I am sorry, that's not what we're going to do.

Okay. And just to followup on the comment on the 4325 that's ramping in the second half, the Wi-Fi bluetooth FM combo solution. As you look at that, can you comment as to whether you will have multiple Tier-1 OEMs on the handset space there or whether there will be one?

I'm not going to comment on that specifically but we have seen design wins across a variety of spaces both in Tier-1 handset players, PC, and other kinds of devices. It's a very interesting device for a wide range of product categories.

All right. That's all I've got. Thanks.

The next question comes from Srini Pajjuri from Merrill Lynch. Please go ahead.

Thank you. Eric, just one quick clarification, the 13 to 18 million growth, is it the baseline growth that we should look forward to as we head into the second half and I am just wondering why you are using that 13 to 18. Is it just for Q2 or is it going to continue?

I'm just using it for Q2. So, what happened in Q1, I think as I said is that we used 13 to 18 and what we saw was some of the costs in Q1 sort of slip into Q2, which is natural, so you have tape-outs at the end of the quarter in March and the tape-outs are going to happen in March. They are going to chance of happening April 1st and boom into Q2 expense and those things are $1 million a pop, so they meaning in terms of how they move. So what happened and where we are right now sort of at the end of the April is, I know all of the Q2, all of the Q1 expenses that have moved into Q2. I don’t know anything about any Q2 expenses, which are going to move into Q3. So I don’t know that basically included everything together as best as I can and to try to come up with a range with some judgment applied to what I think might move into Q3. That’s how we have got the 13 to 18 for Q2 and as I mentioned it's our hope that we will do better than that. I think there is continued slowing growth of spending and slowing growth across the year. And while I can’t project whether you will see it exactly in Q3, I think you will see it in the second half and my suspicion is that the second half will be lower than the first half, all things being equal, simply don’t make some sort of change. So I can't give you specific guidance for Q3 or Q4. What I can tell you is this is it for Q2 and we are hopeful that the similar phenomenon that we saw in Q1 with expenses as people try to manage to make sure that they don’t exceed sudden like the prices right that we get the same effect in Q2 and there is a similar plan of expenses that go forward and some of them actually don’t occur all.

Okay. And then you talked about legal expense being lumpy. I am just wondering as you look out to the next few quarters, what are the art set that might surprises on the either positive side or on the negative side?

It’s hard to say on positive side. I think in terms of legal expenses, we have a forecast of sort of what we are spending. Some of that relates to offensive works, some of that relates to defensive work, and defensive work is timed to typically when things got to turn over, which is when the expenses ramp up quite significantly. So the more things are going to try on a quarter, the more expenses you are going to get. Same thing is true on the offensive side. There are some other offensive actions that we have that we discuss and that we could decide to launch on which would trigger a cost in any particular quarter, but similarly launched it early and in fact should begin discovering and firing all of the other things. So those things tend to be lump and lumpy driven by the timing of the start of the case and whether case or cases are in front of the court at that point in time.

Okay. And then Scott, if I look at your competitive landscape in networking, I think most of your competitors also saw pretty solid orders from Asia. So I am wondering how much of the growth in networking is coming from your Asian customers? And then in the set-top box business, we know this tends to lumpy. The question is, how much visibility do we have to say that that this is not a one quarter depending on may be we will get back into an inventory situation as you head it to second half?

In terms of networking, I think it’s definitely clear that Asia is very strong in that space and we certainly have a fair amount of business over there. I think one of the other things going on though is again we made large investments in 65 nanometer and so I believe our overall competitiveness has increased. So I am not sure that would necessarily apply to all of our competitors, but we will let them say that. In terms of set-top box, we definitely saw strong set-top box growth in this quarter and again the satellite side was the primary emphasis there. Next quarter, we believe, cable will be a strong play in that space. You are right that it is lumpy, but one thing I would observe is that Broadcom has a diverse set of products in the broadband space and so it’s not necessarily bad to have one area lumpy, often the others pick up forward and so forth, so that’s why we saw a both strong growth in Q1 and we expect strong growth in Q2.

Okay. And then my final question, as we head into second half, is there any seasonality that we should associate to any of your businesses or are they primarily driven by product cycles?

Typically industries that have strong second halves are wireless connectivity and the overall consumer marketplace. Digital TV typically peaks for Christmas sales. There are a variety of products that have seasonal components to them, so we don’t have any knowledge why those would be higher or lower than the seasonal aspect to that. So those are businesses that peak in the second half and as see said the infrastructure-related businesses tend to peak in first half as capital is released and it tends to be depleted towards the third and fourth quarters.

Thank you.

The next question comes from Cody Acre from Stifel Nicolaus. Please go ahead.

This is [Patrick Nathan] for Cody Acre. Thanks for taking my call. The first question is, if you guys could update us on what percentage of products are being produced and shipped at the 65 nanometer node and previously you guys have given expectations of 20% of products being shipped at 65 nanometers by year-end and does that seem aggressive or conservative based on 1Q levels?

I mean, a lot of it sort of depends on sort of the ramp cycles of the customers. I would say today we are on the very low-end, we are sub 5%. Our hope is to be somewhere between 10 and 20, by the time we exit Q4 to closer to 20, we all will be happier we will be. But I think at this point, it's just somewhere between 10 and 20 at this point exiting Q4. And we'll update you at that point because I think that’s a more meaningful point to actually discuss it as we sort of move a lot of these design wins into production. And remember there is a whole second set of design wins behind it.

Okay. And in regard to your 3G platform with Samsung, is there any way you could update us on the status of the ramp perhaps quantifying sequential unit volume or revenue in comparison to fourth quarter?

No, I am sorry we don't have those numbers today.

Okay. And just one last housekeeping question. Did you guys give a pro forma tax rate?

We didn't. We used the actual tax rate. Historically, when we have done pro forma tax rate, we've used 10% because we believe that that is a sustainable tax rate for the foreseeable future. I think as we use GAAP, we actually wind up using the actual tax rate, which could fluctuate from 2.5 to 3.5 to 4.5% depending on where we are. We do tend to run a fairly low tax rate.

All right. Thank you very much.

The next question comes from Tim Luke from Lehman Brothers. Please go ahead.

Thanks so much. Just on the increase in revenue performance in the quarter. You kind of just to confirm, the enterprise revenue was up 5% sequentially in the first quarter, I think. And I was just wondering if you had the sequentials on the call, broadband and then in the wireless segment as well?

No, I am sorry we don't have those. Although you could some color on it because since you know the sequential growth for that and you know the percentages we have for the businesses, it will be probably augmented.

And just in the broadband business, you talked about strength in cables Scott. Could you just give us some sense as to what's on the pen that strength in cable? And then on the enterprise networking side, while some players in that industry have been more subdued on the enterprise side, what are you essentially saying that you are seeing the strength is oriented around the carrier area and particularly from Asia, is that correct?

So, on the cable side, we are just seeing really strong infrastructure deployment. And I attribute that to capital availability, the fact that there are a lot of new solutions that offer both digital cable to go with the new digital TV you probably bought. The fact that you can get higher bandwidth on some of these solutions, and a lot of promotional activity that’s going on. So, I think all of those are contributing to that. On the networking side, yeah, my sense is that Asia is strong and we certainly benefit from that and carrier is part of that.

And in the enterprise networking, as I may, you would expect that the new products should start to revert to growth in gigabit ethernet controllers. Could you just clarify what sort of time span about to revert to growth? And then separate just in wireless, you'd previously said I think and could you just clarify the Nokia was a first half '09 timeline that you expected. I just want to confirm that you're saying you did made change to that first half '09 timeline?

On your question on controllers, the estimate we would have is that for the enterprise client controllers we probably see this year bottoming out probably around the third quarter.

Great.

And then up from there. So that can give you an estimate there and again that overall business is doing better than we expected because of our strength on the enterprise service side. On Nokia, in terms of when that ramp will occur, we're no longer forecasting specifics in that space. So I can't give you any more color on that. Other than to say that our program with them is on track and we continue engaged and we are not aware of anything changing since our last conference call.

Was there any Qualcomm royalty payment in the revenues or will that be next quarter? Would you put that in the revenue or in expense line? And is the last time Eric that you will do pro forma guide, will it just be GAAP now going forward?

Okay. So, we received $24 million from Qualcomm after the quarter-end. We have not had a chance to take a hard look at that information. So until it's audited, verified, and finalized, my suspicion is that it's going to sit on the balance sheet. I don’t know what will be split between deferred revenue and other income because some of it relates to prior year and some of it relates to current year.

But it's not in your revenue guide for the quarter then?

Not in revenue guidance at all.

Because again I can’t predict it.

And we are glad that you have not included in there.

Yeah, don’t include because I think it's going to wind up on the balance sheet for a while until we can get to the bottom of whether this is really the right number. I don’t want to record a wrong number.

It could be outside in revenue or it's unlikely it to be ultimately included in revenue?

Well, it could be included in revenue once we get the answer, but we don’t have the answer yet. So for the time being Tim, it's going to -- let's assume it stays on the balance sheet and once we get through auditing and verifying and finalizing and remember we haven’t seen the report, the report is confidential and as you can imagine, all guys are concerned that they don't want to foresee too much, right, but we need to figure that out and we will try to work towards that through this quarter and into next quarter.

Thanks so much.

It's not in the revenue guidance, but it is ultimately income at some point.

And then as far as GAAP, I think we are going to continue to provide GAAP guidance. We will give you all of the pieces as I did before because I think it's important as you build your model you understand the economics of our business at a similar level the way we understand the economics of our business. And for the reasons I cited at the beginning, I think that now is a good time for our business to make that transition.

Thank you.

The next question comes from Krishna Shankar from JMP Securities. Please go ahead.

Yes. Within the enterprise networking business, can you rank order the size of the switches, the client controller, and the server controller business? And would you expect continued growth in the server controller business going forward?

Well, we don’t break it out in the detail you want, so I am sorry there. But in terms of server controllers going forward, that’s a business that we do invest in and we will seek to grow in that space.

Yeah. I just wanted to sort of get a sense of the magnitude of the three businesses; switches, clients versus servers to get a sense for the direction of that business?

In terms of switching in total based on the definition that I gave is the biggest grouping within the enterprise networking business and that's why Scott script specifically mentioned that now given the size of switching, it is now able to pull growth in the total enterprise networking market as we go forward. Getting down to controllers specifically, if you take a look at controllers specifically today, the majority of our revenue from controllers do come from controllers sales and with server segment versus the enterprise client or the small medium business area.

Great. And just a quick follow up within the broadband, you attributed some significant strength in Q2, which was unexpected in the set-top box business. Can you take a guess as, is this new architecture boxes going out or is this, can you give us a sense for what the nature of this unexpected strength is?

As I mentioned to a previous questioner that was a variety of things; promotions, new capitals deployed there, the fact that a lot of people bought digital TVs and want to have digital cable to go with it. And I also think that the fact that people get higher bandwidth was some of the channel bounding products that we are deploying is also exciting for people.

You asked on the cable set-top box category, we do run some of set-top boxes through there -- more of a telco architecture in their network.

So, you expect the Telco IPTV box there to continue going strongly through the rest of the year?

We didn’t guide for the rest of the year. We just said in Q2, there is some very strong demand.

Okay. Thank you.

The next question comes from Sumit Dhanda from Banc of America Securities. Please go ahead.

Yeah, hi. A quick question for you first Eric on the big share count reduction, is it fair to assume that a lot of it was attributable to a lower options overhang in Q1?

Yeah, a chunk of it is definitely due to a lower option overhang in Q1 in terms of moving the fact, that’s one of the reasons why it's hard to predict the exact share count. So you are right. And then in addition, we bought back 20 million shares so in Q1 that has an impact as well plus where we bought back and I would recall a number in Q4, we bought a significant number in Q4 as well.

Okay. And two for you Scott, first on Digital TV, I don’t know if I have missed it, but I didn’t hear too much commentary on that business, you talk about, how the ramp there is doing and then I had a second question.

We had so much to talk about on this call with other topics, we didn’t get all our businesses, so I apologize. DTV, as I said in our last call, remains a growth driver for us this year. We believe that that will continue to be a growing business for us going forward. We are happy with our traction there and are looking forward to seeing ourselves increase.

Okay and the second question I had for you is in terms of your comment on the fact that the 10 to 15% goal you talked about might take longer to accomplish. I am trying to reconcile that versus your other comment which suggests that you really don't have that much visibility into how your baseband silicon will actually ramp with your different customers, your targeted customer base. So, I guess, I am curious as to what's causing you to push back 10 to 15% target timeline given that you extensively don't have tremendous visibility on the trajectory of the ramp in the first place though.

Well certainly part of it is visibility and recognizing that if one of our customers makes a handset in an unpopular color it doesn’t matter how good the baseband chip is and it just might not sell. And so, those are the kind of things we have no control over and makes it hard across to have visibility. We also had opportunity just look at all over the bottoms-up ramps and the different handsets we know of and it is our judgement overall that it could take us longer than we originally though for that. So, that's the reason for the comments and with that we are also going to not try to be in the business of predicting our future market shares. We think that is better left to the analysts given the number of factors that we have no control over.

So just so I am clear certainly some lack of visibility in terms of how these models would ramp but not a judgment on your ability to gain future market share with other OEMs and what have you based on bottoms-up ramp.

' We think we have great products. We've got a great engineering team. We think that combined with all the other technologies that Broadcom has that we can either integrate in the chips themselves or offer as part of chipsets. We think we have a very compelling offering in cellular and believe we can grow that business and so we very much continue to believe that and that's a large basis why we have a strong desire to be a major player in cellular space.

One last one for you Scott, the part of your sequence, your thoughts in that, clearly you believe it does not impact your prospects within baseband why or why not in your opinion.

:

Thank you so much.

Your next question comes from Craig Berger from FBR Capitals. Please go ahead.

Hi guys. Nice job on the results. Just a couple of things to help us understand the magnitude of your GPS business. Kind of how much of the mobile business it makes off or did you ever make any public comments on that when you bought that business.

How many public statements have we made about the business in total when we acquired them a couple of months ago was that there was sub 10 million in revenue and today they are growing might be such they are still very small in terms of total size within Broadcom.

Great thanks and then on the set-top box, I guess customer build, you said you expect it to be very strong in Q2. Does that then come with the expense of Q3 or Q4? Is that how we should be thinking about that lumpiness?

I guess it is too early to guidance for Q3 or Q4 so we'll define on that and that conclusion may or may not be warranted so we'll have to see. I think all we've said is that we see a very very strong customer ordering and customer deployment for products that we build anticipated for delivery in Q2.

And then can you just comment on any of the channel inventory or customer visibility stuff. Is there any excellent channel inventory out there and kind of what's the mood of your customers right now?

I would say that we do not see any particular areas of inventory and in fact we see a relatively high percentage of expedites on the part of our customers so I think that would characterize the mood these days.

Yeah, I would also add that we are cognizant of the macroeconomic things that we are all reading in the newspaper and watching everybody else's earning releases the same way you are. So, we continue to try to verify as we receive orders what the underlying demand really is before we sort of plan to schedule an order in a quarter. So we are doing what we think is responsible in terms of our view of what the real demand is and being prepared in the event that the macroeconomic trends which again we are not seeing in this quarter or next quarter, tack up into us at some later date in the year.

Thank you.

The next question comes from Uche Orji from UBS. Please go ahead.

Thank you very much. Scott, let me just go back a little bit to the while as comments that you have made and follow on some of the questions that have been asked earlier. Now ultimately I will believe that this business should be able to fund its own expenses and fund its own R&D but in the mean time of course the other businesses will continue to fund it now. It is hard for me not to see your comment about not achieving 10 to 15% of segment of your outlook for this business. But how do you manage the allocation of resources overtime such that we don't have a situation where the other businesses that are doing well continue to fund these and it takes much longer to achieve, say a level where this stands to fund itself. So, if I want to setback on portfolio, I would like to get some comfort that the management of this is such that margins don't get dragged down by this for much longer.

Yeah I understand your remark and certainly it is our goal as well that any projects we invest in, we do so because we want to make money. That is the fundamental goal of the management of this company is to do projects that make money and so that has to be our objective. And I think one of the things that is more challenging in cellular than some of the other businesses we've done is that the entity play is higher. So, in other words you need a higher number of engineers to be in that business than you would to enter into GPS or some of the other spaces which is more just pure technology. So for us it is important to make sure that we have the entity play there yet at the same time we want to make sure that we adequately fund the other growth opportunities we have in the company. And as you've seen, we have been doing a lot of 65-nanometer designs, a lot of new technology, a lot of new products throughout and we made those investments in 2006 and 2007 and I think you are seeing in the fruition of some of that today with strong growth in our broadband business and enterprise networking business. But I absolutely agree with you that we do this to make money and we need to believe that we are funding things such that we look at a return on that investment.

Okay let me just touch base on the control, that has been fantastic what you have done with that but you also added headcount in the quarter. My question is what returns to the headcount additions come from and is there any strategic shift in terms of how you will manage headcount in the future as a way to keep up that growth at a pace that is manageable with growth of the company.

I think you saw it on our analyst day last year we put up a matrix that showed all of the different businesses we are in and we rank ordered them by a number of different matrix, ROY, net present value and various other kinds of things and over different periods of time and what we have been doing over the last year is to use that more as a tool to guide where we invest and so some businesses we have invested more, some businesses less. We have stopped two businesses that we decided were not good investments going forward. And so we have been re-allocating headcount and moving things around and I think that overall is good healthy portfolio management and what we as a management team are paid to do. So, absolutely yes we do look at headcount and allocate it to where we think the best return on investment it is going to be for the company.

Having said that, just add to that, one of the things what we did talk about is making a transition this year to something that is more dollar based. So now we hold our business unit accountable for their revenue, their gross margin, and their operating expenses in particular R&D, and their operating income. So we no longer micro-manage it to the end point of where their headcount specifically is coming from or going, because the churn off between higher and ahead in the US and say hiring ahead in India are different costs and the head is not a head. So we allow them to make the appropriate trade offs between outsourcing, internal headcount and sort of where they make the factor costs. And now run a control sheet against where we expect them to perform, where they are actually performing and what the DOCSIS and to the extent they are performing under their targeted return. We freed their incremental spending which has the effect of freezing their head count. And that’s working quite well and to the extent that businesses are performing better than anticipated. We discussed whether and how to spend the overage, how much of it drops through to our investors, how much of we want to reinvest in the business and whether we want to reinvest in the business its coming from or another area within the company. I think it is a much broader more comprehensive process that we had in the past. While the same time holding the General Managers who run billion plus dollar businesses to the way they should be held, which is deliver of P&L to the corporation.

Thanks for that answer. That’s very helpful. Just one last question to caught on something more specific on DOCSIS 3.3.0. One of your competitors announced designing to Motorola in DOCSIS 3.2 and my sense is maybe you are coming a little bit later. Do you expect that when the operating cycle commence say late 2008, you would be able to retain the share you've had in the set-top boxes for DOCSIS 3.3.0 going forward?

No it's certainly our goal to maintain and grow our share going forward. So I wouldn't tell you we have a desire to do anything else. I think what's really key though is that a lot of the MSOs we talked to while they are enthusiastic about DOCSIS 3.0 going forward they have a DOCSIS 2.0 infrastructure today. And so if they want to compete with the Telco bandwidth that are being offered commercially. What they are doing is there looking for this white band solution that we have which is channel bonding using a DOCSIS 2.0 infrastructure. And so in terms of deploying your existing capital that a much better solution and we find that very attractive to those MSOs today. Now long-term we agree 3.0 is the right answer, but it's probably not the right answer if you got off an lot of capital invested in the DOCSIS 2.0 infrastructure today.

Great. Thank you very much.

Gentlemen, there is time for one last question. The final question comes from Ruben Roy from Pacific Crest Securities. Please go ahead.

Hey, thank you very much. Scott, can you talk little bit about the pricing environment for wireless LAN and Bluetooth chips?

Well pricing always goes down in this market. I think one if things that we been able to do that's been helpful is as we go to the combo chips it allows us to aggregate more functionality and to capture a higher percentage of the total wireless LAN build the material in the devices and also allows us to offset some of the ASP decline we would otherwise see in the normal semiconductor market. So for example Bluetooth plus FM was helpful for us in that space. And we believe other combination chips and other features we can add into those chips such as integrating power amplifiers and other things allows us to capture a higher share and offset the normal ASP declines and even in some cases gets some ASP increases so that’s our strategy in that space.

Right. Also remember Reuben that as the mix improves from G to N we also get a nice step up in terms of ASP and as Scott mentioned in his script we did see strong demand in Q1 for our end-based solution.

Right. Could you tell me clear that all how much of your wireless LAN business is at this point?

We haven't probably disclosed that at this time. But it is as you go back over the last three transcripts you could see and experienced so much dramatic growth.

Right. And then in terms of the enterprise product when you do expect Scott that the social start implementing enterprise dot end products?

Well I think we said that we will announce, we will have a press release shortly. So I promise you won't have long to wait.

But in terms of the market itself, do you think this is a 2008 or early 2009 event in terms of IT Managers implementing these products?

Well the market itself exist today. So the question is how fast can we penetrate it. And again I am going defer that to wait till you see our announcements.

Alright. One final one in terms of you talked of about 65-nanometer of investments in 2006 and '07 do you think you are where you need to be in terms of your 65 nanometer products or are we going to accelerating DOCSIS in 2008 65-nanometer note versus 2007.

I think we are where we want to be, we do a bit push on 65-nanometer, I think really pushed ahead of our competition in that space and its going to mean that we have very competitive products over the next year as they are still struggling to get their first ones out there door. So I think that’s positive. The ramp of course takes a while and that’s more customer dependent, but we certainly have 65-nonometer product family that I think is very attractive available for designing and shipment today. Some things like digital TV we have been shipping that since last year in production other things are going into production now over the course of this year. Again I think that was going to prove to be a very good investment on our part and really help us from a competitive point of view.

Great. Thank you.

So with that in closing, I would like to thank everyone for joining us on the call this afternoon. And before we conclude I would like to reiterate just a few points. #1 we did have a strong first quarter and we are pleased what we see continued growth into the second quarter. #2 is we think we need to do some more work on projecting and managing the lumpiness in our operating expenses and that maybe inherent, but we are going to see if we can do a better job in terms of at least projecting and predicting that. We are also working to increase transparency into our business and we made some changes as of today that hopefully will help you with that. And I think anyone has any additional suggestion please direct them to Peter. We would happy to talk with you on that. And finally we strongly believe that trends of conversing more and more features and functions into each of our three targeted end markets really continue to play into our strength and its up to us try to execute on those opportunities and we would see a good outcome. With that thank you and good afternoon.

Thank you for participating in Broadcom's First Quarter and year 2008 Earnings Conference Call. This concludes your conference for today. You may all disconnect at this time.