More BROAD.con questions:
"Despite its ambitious strategy, there is a chink in Broadcom's armor: the stock market. Chief executive Nicholas boasts that every acquisition has been a pure stock trade. That's fine if the market is strong, but now that the tech sector has slumped it will be hard for the company to continue on this path, said Tom Nolle, president of the telecom consulting firm CIMI Corp. (Voorhees, N.J.). Broadcom's share prices now hover in the mid-$30 range, after reaching nearly $300 last summer. "I'm sure that Broadcom will not be able to make any more acquisitions because its share price is too low," he said.
Another booby trap for Broadcom, Nolle said, is the fact that much of its business has been with startup ventures. "Broadcom's success has come from selling to customers that have no earnings, and are financed by venture capital," said Nolle. "Now that venture money has dried up, Broadcom's customer base will not be buying as much."
For Nolle, the key question is, "What is the device that will consume all these chips? Consumer broadband services are not yet mainstream, and it could be some time before they are."
In the meantime, Intel has its microprocessor revenues to help sustain it, as the company waits for its acquisitions to start producing revenue. "I think that Broadcom is the weak sister in this competition," Nolle said.
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