- Having previously believed Broadcom (BRCM) would either scale its baseband processor ops to profitability or exit the business, Nomura's Romit Shah thinks "more recent data" suggests neither is happening, and as a result is downgrading the chipmaker to Neutral.
- Shah argues Broadcom, which bought Renesas' 4G baseband unit last year for $164M and reportedly has scored design wins with Samsung and another OEM, is only making "incremental" 4G baseband progress in a market dominated by Qualcomm. Meanwhile (as discussed recently by OTR Global), 3G baseband sales have been pressured amid competition from Qualcomm and MediaTek.
- Shah had already cut his baseband revenue forecast by $200M to $600M following last week's Q1 report. He also noted management believes slowing high-end smartphone sales will make it tough for Broadcom's market-leading connectivity (combo chip) business to grow this year - it faces growing competition from Qualcomm's Atheros unit - and that its Mobile & Wireless unit posted an op. loss for the first time since '09.
- In contrast with Nomura's take, CLSA thinks management remarks suggest Broadcom is "preparing to make a call" on its baseband unit, and believes an exit by year's end is "highly likely." Prior to Broadcom's report, the firm argued the baseband market has turned into a two-horse race between Qualcomm and MediaTek (76% combined 2013 share, per Strategy Analytics), leaving Broadcom, Intel, Nvidia, and Marvell out of luck.
From other sites
at CNBC.com (May 28, 2015)
at CNBC.com (May 27, 2015)
Video at CNBC.com (Jan 6, 2015)
at CNBC.com (Jan 6, 2015)
at CNBC.com (Dec 31, 2014)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs