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Technology Stocks : C-Cube
CUBE 37.72+0.9%Nov 5 3:59 PM EST
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To: Maya who wrote (50679)3/7/2001 12:18:40 PM
From: Manuel Vizcaya  Read Replies (1) of 50808
 
Comments from Robbie Stephens report this morning concerning BRCM's pre-announcement. Some good and bad news for CUBE.

· Broadcom also indicated that it is determining the best method to account for warrants of Broadcom stock issued to Broadcom customers in conjunction with some of the acquisitions that the company made over the past several quarters due to order cancellations from some of these customers and due to the deterioration in stock prices. We believe that these warrants effectively served to reduce the
customers purchase price of Broadcom products. While it might have worked well in a rising business and stock market environment, we believe that such arrangements can at best prove to have negligible financial impact on Broadcom in the current business environment or at worst prove to have a significantly adverse financial impact on Broadcom over the coming quarters as customers (devoid of an additional financial incentive in the form of warrants) now consider opening their doors to competitors.

· While the stock is down significantly since January 26th, we believe that the company’s fundamentals have deteriorated much more than Broadcom has indicated (i.e., its core business of cable modem and set-top box chips), which could lead to further weakness in the company’s stock. We are therefore continuing to maintain our cautious outlook on the company's stock for the upcoming period and are further reducing our rating on Broadcom stock from LTA to Market Performer.
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