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- Broadcom is set to release earnings after-hours today.
- The company produced break-even results for Q2. A rapid increase in revenue should fall to the bottom line going forward.
- As a supplier for the wildly successful iPhone 6 Plus, Broadcom's earnings should rise. The stock is a buy into earnings.
- The whisper number is $0.85, one cent ahead of the analysts' estimate.
- Broadcom has an 83% positive surprise history (having topped the whisper in 33 of the 40 earnings reports for which we have data).
- The overall average post earnings price move is 'negative' (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.
- Broadcom, Corp. is slated to report 3Q 2014 earnings after the close on Tuesday, October 21st.
- Non-GAAP Earnings Per Share: The Street estimate is $0.84 (range $0.71 to $0.93).
- Revenues: Company guidance is a range of $2.10 bln to $2.25 bln. Analyst expectations are to increase 1.4% y/y to $2.18 bln (range $2.13 bln to $2.22 bln).
Broadcom's New Chip Enables Always-On, Low-Power Location Tracking And Context
- The mobile world is moving in the direction of always-on location tracking, motion tracking and application context.
- A new Broadcom chip combines location positioning and motion sensing in a single chip.
- Motion sensing is a key ingredient in low-power always-available indoor/outdoor location tracking.
- Always-available indoor/outdoor location tracking gives devices full-time context.
- BRCM recently announced the launch of an additional development kit to its portfolio of Wireless Internet Connectivity for Embedded Devices (WICED).
- Since the kit is aimed at developers of all sizes, and it wants to attract potential customers toward purchasing it, it is priced at an affordable $20 per kit range.
- Broadcom faces severe competition from rapidly innovating companies like Texas Instruments and Qualcomm.
- By constantly rolling out products, and tapping into a market that has unlimited potential to grow, Broadcom has taken a smart step to increase its revenues.
- Broadcom is focusing on growth areas such as the Internet of Things, wireless connectivity and wearables with new products.
- Broadcom is cutting jobs to improve the cost structure and move away from a low-margin business such as cellular baseband.
- Broadcom's fundamentals, dividend yield and cash flow are all strong, making the stock worth considering for the long run.
Broadcom: Buying Opportunity In A Growth Dividend Stock
- Broadcom has compelling valuation metrics and strong earnings growth prospects.
- Broadcom will benefit from its decision to explore strategic alternatives for its cellular baseband business, including a potential sale or wind-down.
- In my opinion, BRCM's stock has plenty of room to move up.
Strength In Infrastructure, Broadband And Connectivity Solutions Will Drive Broadcom's Future Growth
- Last month, Broadcom announced its decision to exit the cellular baseband business on account of intense competition in the market.
- The company intends to instead increase its focus and competitiveness in the broadband, infrastructure and connectivity businesses.
- Broadcom performed well in all the three segments in Q2 2014 and expects to see strong growth from these markets in the future as well.
Growth In Broadband And Infrastructure To Offset Decline In Broadcom's Wireless Revenue In Q2 2014
- We believe Broadcom performed well in a seasonally down quarter.
- The company expects its wireless business to decline in Q2 2014, but anticipates revenue to increase by 3%.
- The stock price increased by approximately 20% after the company declared its intent to exit the cellular baseband market.
- Broadcom Corp. (BRCM) is slated to report 2Q 2014 earnings after the close on Tuesday, July 22nd.
- Non-GAAP Earnings Per Share (EPS): The Street estimate is $0.61 (range $0.55 to $0.64).
- Revenues: Company guidance is a range of $2.0 bln to $2.1 bln. Analyst expectations are to decline 1.8% y/y to $2.05 bln (range $2.03 bln to $2.08 bln).
Broadcom Aims To Be An Early Entrant In The Booming Wearable Technology Market
- Last month, Broadcom (BRCM) announced its intention to exit the cellular baseband business on account of the intense competition in the market.
- Broadcom intends to instead increase its focus and competitiveness in the broadband, infrastructure and connectivity businesses.
- In this article, we discuss the growth opportunities in the wearable technology space (part of IoT), and recent steps taken by Broadcom to leverage the growth potential in the market.
- The acquisition of Beceem Communications will supplement Broadcom's long-term growth.
- Broadcom's decision to dump its baseband business will prove to be very beneficial for the company.
- Increased focus on the infrastructure business will also benefit Broadcom.
- 7 insiders sold Broadcom stock within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- 2 of these 7 insiders decreased their holdings by more than 10%.
Broadcom - Investors Applaud Potential Sale Of The Cellular Baseband Business, Sending Shares Up 25%
- Broadcom is potentially selling its huge yet unprofitable cellular baseband business.
- Investors applaud the move, sending shares roughly 25% higher in the matter of weeks.
- This jump already factors in the value-accretive move, and perhaps some more.
- Broadcom announced that it has engaged investment bank JPMorgan to explore strategic alternatives for its cellular baseband business, including a potential sale or wind-down.
- The company expects the sale or wind-down of its cellular baseband business to result in a $700 million reduction in annualized GAAP research and development (R&D) and selling, general and administrative (SG&A) expenses.
- Broadcom accounts for less than 3% of the mobile baseband and application processor market.
Broadcom: Mobile Is Slowing Intrinsic Value Convergence
- The mobile segment is weighing on the consolidated results of operations.
- The intrinsic value estimate is $57 per share, based on the fundamentals of the firm.
- The technicals are long-term bullish but near-term bearish.
Focus On China To Expand Broadcom's Wireless BusinessTrefis • Wed, May. 21
- China accounts for more than 90% of Broadcom's exports.
- The issuance of 4G licenses, promotion of the Broadband China project and popularization of HD videos provide significant growth opportunities in the region.
- Broadcom has been focusing on building relationships with low-cost smartphone makers in China.
- Given Apple's dominant performance Wednesday, during which it sold 43 million iPhones, I have to suspect some incremental benefits to Broadcom, which has had an extensive relationship with Apple.
- At around $30 per share, I believe Broadcom offers compelling value and minimal downside risk.
- The stock remains inexpensive on an absolute basis at 11-times forward consensus earnings. This is a slight discount to the historical average of 13 times estimates.
Yesterday, 11:02 AM
- Broadcom (NASDAQ:BRCM) is above $40 after soundly beating Q3 estimates and providing better-than-feared Q4 guidance. On its CC (transcript), the company noted its Q3 beat was fueled by 16% Q/Q growth for its broadband/wireless connectivity chip reporting segment (67% of revenue).
- Wireless connectivity sales almost certainly got a lift (given Apple's numbers) from strong iPhone-related orders. The iPhone 6/6 Plus feature a Broadcom combo chip containing an 802.11ac Wi-Fi radio; 802.11ac parts carry higher ASPs than chips sporting 802.11n Wi-Fi radios (such as the one in the iPhone 5S).
- Broadband connectivity sales benefited from strong HD set-top IC sales (aided by share gains) for emerging markets designs. That appears to be giving a lift to set-top vendor/Broadcom client Arris (NASDAQ:ARRS) ahead of its Oct. 29 Q3 report.
- The networking/infrastructure chip segment's sales were roughly flat Q/Q at $651M, in-line with expectations. Data center and carrier-related sales both fell - soft telecom capex has taken a toll on many firms - while enterprise and home product sales rose. "Some pickup" is expected in carrier-related sales next year.
- During the Q&A, CEO Scott McGregor hinted Broadcom could announce new capital return plans during its Dec. 9 analyst day, given it now has over $2.7B in U.S. cash. $277M was spent on buybacks in Q3.
Yesterday, 9:19 AM| 1 Comment
Tue, Oct. 21, 4:32 PM| Comment!
Tue, Oct. 21, 4:12 PM
Mon, Oct. 20, 5:35 PM
Fri, Oct. 10, 9:59 AM
- Microchip's (MCHP -12.5%) calendar Q3 warning, which was accompanied by a declaration that it believes "another industry correction has begun and that this correction will be seen more broadly across the industry in the near future," is taking a heavy toll on chip stocks (SOXX -5.5%).
- Intel (INTC -4.2%) and many other chipmakers have joined the several firms that sold off AH yesterday in going in the same direction as Microchip: MU -5.8%. FSL -8.5%. BRCM -3.6%. SWKS -7.5%. RFMD -6.2%. XLNX -4.9%. MXIM -5%. AMBA -5.5%. IDTI -6.7%. CAVM -7.4%. AVGO -10.2%. SMTC -4.3%. SYNA -4.1%. POWI -6.9%.
- Chip equipment makers are also getting hit: AMAT -3.5%. KLAC -3.3%. LRCX -2.3%. UTEK -2.5%. KLIC -2%.
- As Microchip noted in yesterday's warning, the company's very diversified customer base, together with its recognition of distributor revenue on a customer sell-through basis rather than a distributor sell-in basis, often allow it to see industry changes before peers.
- The microcontroller vendor added its warning was driven by a September decline in sales to Chinese clients, and observed it has typically "returned to sequential revenue growth after two quarters" during past downturns.
- Chip stocks have had a good run over the last 12 months, aided by healthy mobile demand and the industry's consolidation wave.
Wed, Sep. 24, 6:46 PM
- Aimed at data centers shuffling huge amounts of traffic, Broadcom's (NASDAQ:BRCM) new StrataXGS Tomahawk chip delivers 3.2Tbps of Ethernet switching capacity - 32 100G ports, 64 40G/50G ports, or 128 25G ports. Dell, Juniper, Brocade, and Huawei are among the switch OEMs that furnished quotes for the PR.
- SDNCentral observes the Tomahawk isn't meant to replace Broadcom's flagship Trident II switching chip (can handle 100+ 10G ports), but instead aims for "an even higher-end market of hyperscale data centers and anything else requiring the highest port counts and lowest latency available."
- The chip also supports network visibility/analytics features that could make it well-suited for a budding software-defined networking (SDN) market. SDN is widely viewed as an opportunity for Broadcom, given deployments often rely on switches running off-the-shelf silicon rather than proprietary ASICs.
- Last week, Cavium's (NASDAQ:CAVM) newly-acquired Xpliant unit showed off a 3.2Tbps switching chip that supports a very high level of programmability (helpful for SDN). Broadcom's chip has begun sampling (mass-production could take some time), while Cavium's is expected to sample in Q4.
Fri, Sep. 19, 9:36 AM
- iFixit's teardown of the iPhone 6 Plus turned up five Qualcomm (NASDAQ:QCOM) chips, up from the three found in last year's teardown of the 5S and nearly matching the six found in certain Galaxy S5 teardowns.
- In addition to the expected Cat-4 LTE baseband modem, a Qualcomm power management IC, RF transceiver, receive-only chip (needed to enable LTE carrier aggregation), and envelope-tracking IC (relatively new, improves battery life) were found in the 6 Plus.
- In-line with rumors and the company's hints, an InvenSense (NYSE:INVN) motion sensor - specifically, a 6-axis gyroscope/accelerometer - was found. That suggests InvenSense has displaced STMicroelectronics (NYSE:STM) as the iPhone's motion sensor supplier.
- Two Skyworks (NASDAQ:SWKS) power amplifier modules are found, including a low-band LTE part. Avago (NASDAQ:AVGO) has both a high-band amplifier module, and an integrated ultra high-band amplifier/FBAR filter module. TriQuint (NASDAQ:TQNT) can claim a 3G amplifier module, and merger partner RF Micro (NASDAQ:RFMD) an antenna switch module.
- Broadcom (NASDAQ:BRCM) appears to remain the iPhone's combo chip supplier (courtesy of a module from partner Murata), and also supplies a touch controller IC. Chipworks thinks Broadcom also has the Wi-Fi slot for the Apple Watch.
- As expected, NXP (NASDAQ:NXPI) is supplying an NFC module and the M8 motion co-processsor, and Cirrus Logic (NASDAQ:CRUS) the audio codec IC. Texas Instruments (NASDAQ:TXN) is providing a touch transmitter IC.
- Moving in response: INVN +1.9%. AVGO +1.5%. STM -3.9%.
Thu, Sep. 11, 5:21 PM
- TiVo (NASDAQ:TIVO) jumped 7.3% today in its biggest gain in more than a year after Broadcom (NASDAQ:BRCM) announced a partnership to supply chips for TiVo's set-top boxes that could expand access to European cable operators.
- The new technology delivers 4x the resolution of a traditional 1080p60 HD screen, and displays life-like resolution speeds and richer color gradation.
- Two BRCM deals in two days - supplying new chips for TiVo’s set-top boxes which will support Ultra HD content, and supplying the same technology to the devices of Vodafone’s German business - may give TiVo access to Kabel Deutschland’s 8M subscribers, Brean Capital analyst Todd Mitchell says.
Fri, Sep. 5, 11:37 AM
- Broadcom's (BRCM +1.2%) 20%+ discount relative to chip peers (due to combo chip and stock compensation worries) is unjustified in light of its "leadership in attractive Networking and Broadband markets that account for 60%+ of sales and 80%+ of profits," says BofA/Merrill's Vivek Arya. His target has been upped by $5 to $50, courtesy of a sum-of-the-parts analysis.
- Arya declares Broadcom is worth $46/share even if the combo chip business is deemed worthless, and that it's worth $54/share is the business can stabilize. "At just 12x PE, 9x 2015E EV/EBTDA, solid 7-8% FCF yield, BRCM's assets look too attractive and transformation too impactful to ignore in a consolidating industry."
- The note shortly follows the launch of a new high-end smartphone/tablet combo chip that doubles 802.11ac Wi-Fi throughput (to 650Mbps) relative to existing parts. Improvements in simultaneous Wi-Fi/Bluetooth performance are also promised.
- Broadcom, which maintains a dominant share of the high-end combo chip market (Qualcomm has been exerting pressure elsewhere), says its new chip will be "shipping in mobile devices" in Q3. That could be a reference to the iPhone 6 and/or the Galaxy Note 4.
Fri, Aug. 29, 7:06 PM
- Broadcom's (NASDAQ:BRCM) WICED Sense kit contains a Bluetooth chip, five MEMS sensors (a gyroscope, an accelerometer, a compass, a barometer, and a temperature/humidity sensor), and related software. An iOS app meant to interact with the kit has been published in the App Store.
- Developers can use the kit to grab sensor data and add Web connectivity to a variety of embedded/wearable devices (the proverbial Internet of Things). Cited examples include sending a text alert if the temperature in an area of one's home rises above a certain level, and improving one's tennis stroke via sensor data obtained by attaching the kit to a racquet.
- Broadcom is hoping the kit sparks broader OEM design activity for its WICED platform, which (with the help of a Wi-Fi modem and Bluetooth bridging), aims to provide connectivity for products ranging from cameras to fridges to thermostats. Qualcomm, Intel, and Texas Instruments are some of the other companies hoping to aggressively grow their embedded chip sales.
Thu, Aug. 14, 2:59 PM
Thu, Jul. 24, 12:45 PM
- Broadcom (BRCM -1.2%) is selling senior notes due 2024 and 2044. It hasn't yet disclosed the offering's size. (prospectus)
- The company says it might use some of the proceeds to redeem up to $400M of its 2.375% 2015 notes. Broadcom had $2.36B in cash at the end of Q2, and $1.4B in debt.
- The offering comes as Broadcom gets set to wind down its baseband processor ops, and cut 2.5K jobs along the way.
Wed, Jul. 23, 10:44 AM
- After "testing the market" to find a buyer for its money-losing baseband chip unit (previous), Broadcom (BRCM +0.8%) has decided to simply wind it down, CEO Scott McGregor stated on the Q2 CC (transcript).
- The chipmaker plans to cut 2.5K jobs (~1/5 of its workforce), and record $230M in charges (mostly cash-based) over the next 12 months. $164M worth of impairment/inventory charges were recorded in Q2.
- Broadcom's baseband ops are only expected to account for $50M-$60M of expected Q3 revenue of $2.1B-$2.25B. In Q2, they accounted for $84M of the company's $781M in mobile/wireless chip sales (combo chip-dominated).
- While mobile/wireless sales fell 8% Q/Q due to baseband weakness, infrastructure/networking sales grew 10% to $635M, aided by healthy Ethernet switching chip demand for data center and carrier hardware - heavy spending by Internet giants has bolstered the former market - and the displacement of internally-developed ASICs at switch OEMs.
- Broadband chip sales rose 12% Q/Q to $625M, thanks to healthy modem and set-top IC sales. Broadcom says it's gaining emerging markets set-top share, and also benefiting from the adoption of advanced features (multi-stream transcoding, extra tuners, the adoption of MoCA home networking).
- Prior Broadcom earnings coverage
Tue, Jul. 22, 5:26 PM
- Broadcom (NASDAQ:BRCM) expects Q3 revenue of $2.1B-$2.25B, in-line with a $2.19B consensus.
- Q2 product gross margin was 55%, +280 bps Q/Q and +290 bps Y/Y, and above guidance of 53.95%-54.95%.
- Q3 product GM is expected to be at 55% (+/- 75 bps), and opex is expected to decline $40M-$60M Q/Q (job cuts related to the baseband exit?).
- Q2 results, PR
Tue, Jul. 22, 4:10 PM| Comment!
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