Jul. 8, 2014, 4:40 AM
- Samsung (SSNLF), Intel (INTC) and Dell have teamed up to create a standard by which household gadgets communicate with each other, called the Open Interconnect Consortium. The partnership also includes chipmakers Broadcom (BRCM) and Atmel (ATML).
- The new consortium will rival the AllSeen Alliance, a similar framework supported by Qualcomm (QCOM), LG (LGEIY), Microsoft (MSFT) and other companies.
Jun. 17, 2014, 6:58 PM
- The consolidation wave that has hit the semi industry could soon yield tax inversion deals for foreign firms similar to deals seen in the healthcare industry, says FBR's Christopher Rolland.
- Inversion deals allow U.S. companies buying foreign firms to see lower tax rates if less than 80% of the equity in the new company is owned by legacy U.S. shareholders, and the post-merger company has substantial foreign ops.
- Rolland thinks ARM (ARMH), NXP (NXPI), Mellanox (MLNX), and Taiwan's MediaTek could be among the foreign companies targeted by U.S. chipmakers. Worth noting: Mellanox sells more than just chips, and ARM's business model depends on the company maintaining a neutral status within the industry.
- Meanwhile, Nomura's Romit Shah names 15 potential M&A candidates, and divides them into 3 groups: "Sub-scale companies" with high margins and strong IP; "strategic companies" with compelling product lines; and "undervalued companies."
- Shah's "sub-scale companies:" IDTI, ISIL, MTSI, MCRL, SMTC, SLAB.
- "Strategic companies:" ALTR, AMCC, ATML, CAVM, MPWR, BRCM ($22.5B market cap could make it tough to digest).
- "Undervalued companies:" DIOD, IRF, MSCC.
Jun. 17, 2014, 11:08 AM
- Benchmark's Gary Mobley has cut Broadcom (BRCM -0.5%) to Hold, albeit while keeping his $40 PT.
- Like others on the Street, Mobley is worried about low-end/mid-range combo chip share loss as Broadcom exits the baseband market - as it is, Qualcomm's Atheros unit has been pressuring Broadcom in this space. Nonetheless, he sees the baseband exit providing a $0.40 2015 EPS boost.
- The downgrade comes a day after Broadcom made new 52-week highs.
Jun. 6, 2014, 2:27 PM
- Broadcom (BRCM +0.6%) has bought a unit of India's Ittiam Systems that specialized in improving Wi-Fi transfer speeds, the Economic Times reports.
- The purchase comes as Broadcom faces tougher competition in its Wi-Fi/Bluetooth/GPS combo chip business from Qualcomm and others, particularly in the low-end/mid-range smartphone market.
- The company still dominates the less cost-sensitive high-end segment, thanks in large part to major design wins with Apple and Samsung. Broadcom had an estimated 39% of the 2013 mobile connectivity market.
- Shares +19% on the week due to enthusiasm about Broadcom's planned baseband exit.
Jun. 4, 2014, 1:40 PM
- Drexel Hamilton's Richard Whittington has joined the list of analysts praising Broadcom's (BRCM +2%) plans to exit the baseband chip market, upgrading shares to Buy and lifting its PT by $15 to $45.
- Whittington has upped his 2014 EPS estimate by $0.18 to $2.58 (above a $2.54 consensus). He also sees Broadcom benefiting from Apple, Google, and Samsung's home/auto connectivity initiatives - the company was one of many partners mentioned by Apple when the company unveiled its HomeKit automation platform on Monday.
- Stifel downgraded Broadcom to Hold yesterday; like Wells Fargo, it's worried a baseband exit could lead to combo chip share losses.
- Separately, Taiwan's Economic Daily News states MediaTek is "likely" to buy Broadcom's baseband unit, which many think will be shut down rather than sold. It's worth noting MediaTek already has an extensive lineup of 3G basebands, and is getting ready to ramp shipments of a 4G part.
Jun. 2, 2014, 12:50 PM
Jun. 2, 2014, 12:23 PM
- After opening up 13% on news it's weighing a sale or wind-down of its baseband chip unit, Broadcom (BRCM) has pared its gains a bit.
- One concern: Broadcom might little to nothing in a sale, given the baseband unit has been hemorrhaging cash and (as recently noted by CLSA) companies not named Qualcomm (QCOM +0.3%) or MediaTek have had a rough time turning a profit in the R&D-intensive business.
- Broadcom is only 9 months removed from paying $164M for Renesas' 4G baseband unit. Since then, the company has reportedly scored 4G design wins, but has also warned of top-line pressures caused by 3G weakness.
- Goldman notes Broadcom had only 4% of the 2013 baseband market (per Gartner), a tiny fraction of Qualcomm's 62%, and is set to lose share in 2014. The firm estimates Qualcomm gets a $0.02 EPS benefit for each percentage point it gains.
- Goldman adds Broadcom has noted its low-end/mid-range combo chip sales could be pressured as more functionality gets integrated with baseband ICs; the company had 39% of the 2013 mobile connectivity market to Qualcomm's 20%. Likewise, Wells Fargo sees a baseband exit hurting Broadcom's combo chip position.
- Texas Instruments, Freescale, and ST-Ericsson each wound up shutting down their baseband ops rather than selling them.
Jun. 2, 2014, 9:16 AM
Jun. 2, 2014, 7:38 AM
- The company has hired JPMorgan to help explore strategic alternatives for its cellular baseband business, including a sale or wind-down.
- Either action could be expected to save about $600M in annualized R&D and SG&A expenses, says Broadcom (BRCM), after filtering out reductions in stock-based compensation.
- Along with the news, Broadcom updates its outlook for the quarter ending this month, continuing to expect revenue of $2-$2.1B, but now seeing product gross margin to be at or above the high end of previous guidance.
- Source: Press Release
- Shares +10.7% premarket
May. 19, 2014, 10:26 AM
- In a bullish call on chip stocks, RBC's Doug Freedman has upgraded Nvidia (NVDA +2.9%), Broadcom (BRCM +1.8%), Micron (MU +3.3%), Texas Instruments (TXN +1.3%), and Altera (ALTR +1.8%) to Outperform.
- Freedman sees the industry's free cash flow profile improving as it transitions "into a more mature era," and companies embrace more "shareholder-friendly capital-allocation strategies."
- Nvidia, TI, and Altera have already announced major cash-return efforts in recent years. TI has promised to return all of its FCF to shareholders, save for funds needed to pay down debt.
- Micron (just digested Elpida) and Broadcom have been more cautious, though the latter did hike its dividend in January.
- Freedman downgraded Micron on Jan. 3, when shares were at $21.66. He was bullish during the company's big 2012/2013 rally.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
May. 13, 2014, 1:26 PM
May. 12, 2014, 7:55 AM
- TheMarker reports Quallcomm (QCOM) is in talks to buy Israeli chipmaker Wilocity for ~$300M. Wilocity is said to have given a notice of sale to employees.
- Wilocity, founded in 2007 by ex-Intel employees, develops chips and related firmware for the nascent WiGig (802.11ad) standard, which aims to act as an HDMI/USB alternative by enabling transfer speeds of up to 7Gbps between devices within 10 meters of each other (a much shorter range than Wi-Fi).
- The purchase would complement Qualcomm's Atheros Wi-Fi chip unit, which already has a partnership with Wilocity and has been grabbing share from Broadcom (BRCM) in the mid-range Wi-Fi/Bluetooth combo chip market - future combo chips with integrated WiGig seem likely.
- Broadcom, which still controls the high-end combo chip space, also backs WiGig, as do Intel, Marvell, and Nvidia.
May. 2, 2014, 9:28 AM
- 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.
Apr. 24, 2014, 4:36 PM
- Pandora (P) expects Q2 revenue of $213M-$218M and EPS of $0.00-$0.03, below a consensus of $219.3M and $0.05. Full-year guidance is for revenue of $880M-$900M (up $10M from prior guidance) and EPS of $0.14-$0.18 (up $0.01) vs. a consensus of $892.3M and $0.16. Shares -5% AH. (Q1 results, PR)
- SunPower (SPWR) expects Q2 revenue of $575M-$625M and EPS of $0.15-$0.35, largely below a consensus of $628.3M and $0.30. Full-year guidance is stronger: revenue of $2.5B-$2.65B and EPS of $1.10-$1.40 vs. a consensus of $2.55B and $1.21. Shares +0.9% AH. (Q1 results, PR)
- Broadcom (BRCM) expects Q2 revenue of $2B-$2.1B vs. a $2.07B consensus. Gross margin is expected to rise 75-175 bps Q/Q. Shares -0.2% AH. (Q1 results, PR)
Apr. 24, 2014, 4:07 PM| Comment!
Apr. 24, 2014, 12:10 AM
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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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