some more BRCM details from a new report......
------Broadcom Corporation ? April 28, 2000
2
Broadcom reported a very strong March quarter, with sequential sales growth
accelerating to 19%. The outlook is for another double-digit sequential increase in
the June quarter, and we believe near-term visibility is better than usual. New
products and markets are boosting prospects for the company this year and next.
Analysis of Results
Broadcom posted sales of $191.3 million for March, up 19% sequentially and 91%
from a year ago. Our model had anticipated 10% sequential sales growth, and we
believe the sales results beat unpublished, speculative assumptions. In our opinion,
top-line growth generally has been the figure of merit for Broadcom?s stock
valuation.
Although lower sequentially by 40 basis points, gross margins were 58.7% of sales,
slightly better than the 58.0% we expected. Improved cost efficiencies are leading
the company to expect a more modest decline in gross margins than previously
expected. Operating EPS of $0.18 (excluding $2.9 million in one-time, acquisition-related
charges) soundly beat our $0.15 estimate and $0.16 Street consensus.
Excluding the dilution and expenses related to the three acquisitions concluded in
the quarter, EPS would have beat Street expectations by $0.04. By many metrics,
this is the best performance Broadcom has posted in a year.
Very Bullish Outlook
Recent indications from major customers such as Motorola/GI (24% of sales in
March) and Cisco (11.6%) suggest this will be an extraordinary year for the markets
Broadcom dominates.
Specifically, Motorola?s recent forecast for the year of 2.5?3 million cable modems,
5 million-plus interactive set-top boxes, and 8 million units of set-top box
production capacity exceeds earlier projections. Specifically, we believe
Motorola/GI had earlier expected to ship 1.5 million cable modems and 4?4.5
million set-top boxes this year. The fact that Motorola/GI shipped one-half million
cable modems in the first quarter alone (up 50% sequentially and 3x from a year
ago) is good cause for the company to increase its forecast.
In addition, we believe other cable modem and set-top box customers are
experiencing similar end-market acceleration. We estimate Broadcom has $15?$40
content in about 80% of the cable modem and digital cable set-top boxes shipped
worldwide, and is, therefore, a prime beneficiary of the quickening pulse in the
broadband access market.
The indications from the data communications market (i.e., 10/100/1000 Ethernet)
are more mixed. Price per port for Fast Ethernet chips is falling fast, and
Broadcom?s market share and unit growth are nearing asymptotic levels. More
positively, sales to Cisco jumped 40%?50% sequentially in the March quarter, while
shipments to 3Com grew about 20% (although both numbers include cable-related
chips as well). In addition, we believe Gigabit Ethernet (GbE) over copper is finally
March Quarter Results
By many metrics, this is
the best performance
Broadcom has posted in
a year. |
