Wed, Jul. 29, 5:35 PM
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Tue, Jul. 21, 5:10 PM
- Apple beat FQ3 estimates, but reported slightly below-consensus iPhone unit sales of 47.5M. In addition, FQ4 revenue guidance of $49B-$51B was below a $51.1B consensus. iPhone revenue was up 59% Y/Y, while iPad revenue fell 23%.
- iPhone/iPad chip suppliers are selling off in response. Cirrus Logic (NASDAQ:CRUS) -5.6% AH. Skyworks (NASDAQ:SWKS) -6.8%. Qorvo (NASDAQ:QRVO) -6.4%. Avago (NASDAQ:AVGO) -3.8%. Broadcom (BRCM - merging with Avago) -1.3%. InvenSense (NYSE:INVN) -4%. NXP (NASDAQ:NXPI) -3.4%.
Fri, Jul. 17, 4:16 PM
- Not content with its recent ~$37B cash/stock deal to merge with Broadcom (BRCM +0.2%), acquisition-hungry Avago (AVGO -0.8%) is looking to bid for Broadcom rival Marvell (MRVL +0.5%), "a reputable source" tells Light Reading.
- Marvell moved slightly higher following the report. With a current $6.7B market cap - a deal could require a price above $8B - Marvell would be a relatively easy fish to swallow. However, its product line overlaps with Broadcom's in the Ethernet transceiver, Ethernet switching chip, and Wi-Fi/Bluetooth combo chip markets (among other areas), and the Ethernet overlap could result in antitrust scrutiny.
- There has been speculation Avago isn't done with its buyout binge. The company snapped up LSI, PLX Technology, and Emulex prior to the Broadcom deal, and has a good track record of reaping major cost synergies from acquisitions.
- Meanwhile, Marvell has been viewed as a potential acquisition target as the chip industry continues consolidating. Shares rose earlier this week on a report of buyout interest from state-owned Chinese firm PDSTI.
Tue, Jul. 7, 1:10 PM
- RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.1%), and Avago (AVGO -3.2%) are posting 3%+ declines on what's proving a rough day for many high-beta tech stocks.
- With Chinese equities plunging, Skyworks, Qorvo, and Avago's Chinese exposure could be contributing to their selloff. The Nasdaq is down 0.7%, and the Philadelphia Semi Index 1.7%.
- Avago's decline comes as Oppenheimer's Rick Schafer downgrades merger partner Broadcom (BRCM -2%) to Market Perform. Curiously, he also declares Avago (along with Skyworks) to be a top wireless chip pick.
- Schafer: "Rising RF complexity (and content) remains one of our favorite thematic plays heading into 2H15 ... We see incremental RF content opportunities for both Avago and Skyworks on the forthcoming iPhone 6S ... Skyworks further benefits from 50 percent plus 4G reference design share with China's major baseband suppliers."
- Broadcom shareholders are set to receive either $54.50/share in cash, 0.4378 Avago shares for each Broadcom share, or some combination thereof, with the cash portion of the deal totaling $17B. Broadcom currently trades 7% below the cash payout price, and (based on Avago's current trading levels) 11% below an equity payout price of $56.87.
Thu, Jun. 25, 1:29 PM
- Broadcom (BRCM -0.1%) is partnering with Chinese networking hardware leader H3C (until recently an HP subsidiary) to "explore new market requirements and technical trends to optimize the interaction and performance of current and future platforms and architectures." H3C uses Broadcom's Ethernet ICs in its hardware.
- The company is also partnering with Chinese systems integrator Inspur on 4K/DOCSIS 3.0 set-top solutions relying on Broadcom's chips, and with Beijing-based pay-TV provider StarTimes to "jointly define and develop set-top box offerings in Africa," and "invest engineering resources to develop a series of low-cost set-top boxes and high-end Ultra HD home gateways."
- Broadcom has been taking set-top IC share from STMicroelectronics. On its Q1 CC (transcript), the company stated its set-top/broadband modem chip sales grew at a double-digit Y/Y clip.
- Meanwhile, speculation continues to swirl that Avago (AVGO +0.3%), which is set to merge with Broadcom in a ~$37B cash/stock deal (follows deals for LSI, PLX, and Emulex), is up for further M&A. FBR's Chris Rolland: "They are looking for higher quality, accretive ideas that typically diversify their business. The target list is many."
- With all 4 of Avago's recent deals having a major data center component, Gartner's Sergis Mushell thinks the company could look to fill remaining holes in its data center line, such as power management and timing ICs. IDC believes analog/mixed-signal chipmakers with high gross margins could be in play - Texas Instruments appears to be looking in that direction.
- Prior Broadcom/Avago coverage
Thu, May 28, 1:34 PM
- In a presentation (.pdf) discussing their planned merger, Avago (AVGO -0.4%) and Broadcom (BRCM -2.6%) state they're aiming for a 40% long-term op. margin, up from the 30% collectively possessed by the companies today. Gross margin is forecast to rise to 60% from a current 57%, and R&D and SG&A spend respectively fall to 16% and 4% of revenue from 20% and 7%.
- Avago and Broadcom, who have $15.1B in revenue between them, are only forecasting a 5% long-term revenue CAGR. However, Avago CEO Hock Tan states the outlook is "probably conservative."
- Avago plans to partly finance the $17B cash portion of the deal via $9B worth of new debt. The post-merger company is expected to have $15.5B in debt and $1.3B in cash; Broadcom shareholders will have a 32% stake. The deal is expected to close in Q1 2016.
- Many potential product synergies exist. Among the possibilities: Wi-Fi/Bluetooth solutions that pair Broadcom's combo chips with Avago RF components; server/storage connectivity product lines featuring a mixture of Broadcom's Ethernet transceivers and switching chips and Avago's adapter cards and optical transceivers - Stifel thinks Mellanox (MLNX -0.3%) could be at risk here - and telecom equipment product lines that combine Broadcom's network processors and switching chips with Avago's optical components.
- Meanwhile, in its FQ2 report (issued in tandem with the merger announcement), Avago has guided for FQ3 revenue of $1.74B (+/- $25M), above a $1.68B consensus. The company reported a 66% Y/Y increase in FQ2 wireless chip revenue (aided by strong Apple/Samsung demand), along with 74% and 64% increases in wired infrastructure and industrial/other revenue (lifted by both organic growth and M&A).
Thu, May 28, 7:21 AM
- Avago Technologies (NASDAQ:AVGO) announces it will acquire Broadcom (NASDAQ:BRCM) in a stock and cash transaction valued at $37B.
- Broadcom shareholders will receive $54.50 in cash per share and 0.4378 shares in the newly formed company as part of the deal
- Avago expects the acquisition to be immediately accretive to earnings and help it generate $750M in annual cost synergies within 18 months of the closing.
- BRCM +0.85% premarket to $57.64 after soaring yesterday off leaked reports of the deal.
- Previously: Avago reportedly in merger talks with Broadcom; shares soar (May. 27 2015)
Wed, May 27, 2:26 PM
- The WSJ reports Broadcom (BRCM +16.6%) is "in advanced talks to be bought" by Avago (AVGO +6.4%). Shares of both companies have shot higher.
- A deal would effectively be a merger rather than an acquisition: Avago is currently worth $35.1B, and Broadcom $32B. The post-merger company would have a massive product line spanning a variety of mobile, networking, home electronics, and telecom equipment chip markets.
- Avago has bought a string of companies over the last 18 months amid a massive chip industry consolidation wave, and has been rumored to be eying several others.
- Update (3:37PM ET): Bloomberg is backing up the WSJ's report, while adding a deal could be announced as soon as tomorrow.
- Update 2 (3:50PM): CNBC reports Avago's board plans to vote on the deal tonight.
Wed, May 27, 12:59 PM
- Competitive fears for Broadcom's (BRCM +2.1%) Wi-Fi combo chip ops (largely Qualcomm-related) are overblown, argues BofA/Merrill while reiterating a Buy rating and $54 target.
- Among BofA's arguments: 1) Broadcom's combo chips are still best-in-class, and discrete solutions are preferred on the high-end rather than ones integrated with baseband processors. 2) Broadcom maintains a ~57% combo chip share, and has ~1K dedicated engineers for the business. 3) With combo chips sporting a ~$4 ASP, there's little need for OEMs to get frugal. 4) Broadcom's baseband market exit opens the door to partnerships with former baseband rivals such as Spreadtrum. 5) 802.11ac/dual-band Wi-Fi chips and location hub support (found in Broadcom's Galaxy S6 design) can boost ASPs, and IoT products can increase Broadcom's addressable market.
- The firm also expects Broadcom (aided by its recently-launched Tomahawk switching chip) to benefit from a 25G Ethernet upgrade cycle, and notes the company's set-top chip share gains against STMicroelectronics. It forecasts 2017 EPS of $4 (the 2015 consensus is only at $3.01), and thinks a $61-$75/share valuation is possible on a sum-of-the-parts basis.
Tue, May 12, 12:46 PM
Sat, May 2, 3:42 PM
- iPhone/iPad combo chip supplier Broadcom (NASDAQ:BRCM) is providing a Wi-Fi/Bluetooth/NFC/FM radio combo chip for the Apple Watch (NASDAQ:AAPL), according to an ABI Research teardown of the Watch's S1 chip module. As expected, NXP supplies a complementary NFC controller.
- The teardown also uncovered a 6-axis STMicroelectronics (NYSE:STM) motion sensor (accelerometer/gyproscope). There has been some debate about whether InvenSense (NYSE:INVN) will be a motion sensor supplier for the Watch, as it is for the iPhone 6.
- Analog Devices (NASDAQ:ADI) supplies a touch controller IC. Barclays reported in March ADI had scored multiple design wins to enable Apple's Force Touch pressure-based response feature (supported by the Watch) on future iPhones/iPads.
- IDT (NASDAQ:IDTI) supplies a wireless charging IC. The design win comes after Samsung opted to use a Texas Instruments charging IC within the Galaxy S6; IDC supplies a chip for the S6's charging pad. Dialog Semi (OTC:DLGNF) provides a power management chip.
- SanDisk/Toshiba (NASDAQ:SNDK) supply an 8GB NAND flash chip, and Micron/Elpida (NASDAQ:MU) a 4Gb (512MB) SRAM chip. SRAM typically carries higher ASPs than DRAM for a given amount of capacity (it's also faster).
- In the near-term (and perhaps longer), Watch volumes will likely amount to a small fraction of iPhone volumes - whereas Apple sold 192.7M iPhones in 2014, IDC forecasts 15.9M 2015 Watch shipments, and more bullish estimates are still generally in the ~20M range. However, strong growth is expected over the next several years, and the first-gen Watch serves as a valuable reference win when competing for other smartwatch/wearable designs.
Wed, Apr. 22, 9:15 AM
Tue, Apr. 21, 5:37 PM
Tue, Apr. 21, 5:35 PM
- In addition to beating Q1 estimates, Broadcom (NASDAQ:BRCM) is guiding for Q2 revenue of $2.1B (+/- $75M), above a $2.07B consensus. Strong Galaxy S6 sales could be partly responsible - Broadcom is believed to supply a Wi-Fi/Bluetooth combo chip and a GPS/sensor hub IC. Continued iPhone 6 and data center hardware strength (driven by Web/cloud demand) might also be factors.
- Q1 gross margin (non-GAAP) was 54.4%, -30 bps Q/Q and +250 bps Y/Y, and slightly below a guidance midpoint of 54.7%. However, GM is expected to rise to 56% (+/- 75 bps) in Q2.
- In addition, R&D/SG&A spend is expected to drop ~$15M Q/Q (+/- $10M). Thanks to Broadcom's baseband modem exit, R&D spend was down 15% Y/Y in Q1 to $539M, and SG&A spend 4% to $177M.
- $335M was spent on buybacks, providing a lift to EPS. Broadcom established a $1B 2015 buyback authorization last December.
- BRCM +5.5% AH to $46.38, slightly topping a 52-week high of $46.31.
- Q1 results, PR
Tue, Apr. 21, 4:08 PM
Mon, Apr. 20, 5:35 PM
Broadcom Corp is provider of semiconductors for wired and wireless communications. It provides a portfolio of SoCs that seamlessly deliver voice, video, data and multimedia connectivity in the home, office and mobile environments.
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