Well we all had quite the week as BRCM announced its new BCM7014 chip, which sent the stock over $100 in intraday trading. Afterwards, it came back to earth (as we benchmark 100 times FY99 earnings our reality <g>). Overall, we finished up 1.2% for the week. I can only think of two things that explain the above:
1) Valuation. Granted the chip will see great demand, but once BRCM hit $100, the selling began and people took their gains. Overall, this short-term move means nothing for BRCM's long-term outlook.
2) Then again, I don't know how many people have been following the Avtel story:
Subject 23663
Apparently, Avtel Communications (AVCO) made the announcement on Thursday of an ASDL service launch in a small area of California. With this alone, AVCO went from two bucks to $31 on Thursday. Then, AVCO gets halted today as the NASDAQ wants more information from the company.
My point: Is it conceivable that the so-called “smart-money” seen AVCO as the next, biggest last-mile connection going and sold out of BRCM to bid this thing up. Doing the most basic DD tells one AVCO is a real loser. Not to mention there was a general misconception on what AVCO actually does. From its SI thread, it appears AVCO wasn't even worth two bucks before the announcement.
Just curious on what others think.
Ah, that feels much better now. As Dennis Miller says: I vent, therefore, I am.
Regards,
Pat
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