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Technology Stocks : Broadcom (BRCM)
BRCM 54.670.0%Feb 9 4:00 PM EST
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To: Raymond Duray who wrote (1108)3/16/1999 8:12:00 PM
From: Wizard  Read Replies (1) of 6531
 
>>"Just wondering, is BRCM involved in the transition to GaAS and SiGer as we inexorably move up the bitrate trail from OC-48, thru 192 and beyond?"

That is not Broadcom's bag. Galium is not mass market and won't ever be and Silicon Germanium is a ways out.

Broadcom's game is digital set-top boxes, gets a piece of each cable modem sold (2mm cable modems were sold in 1998 and all had BRCM chips) and is big in networking chips.

I think BRCM beats the estimate handily but I don't see much upside to the stock (yet).

Why?

3Com is the second biggest customer (26% of last qtrs revenues) and COMS blew up this quarter so that is causing some skittishness before the earnings report.

Even when the earnings report comes out, you can't give BRCM full credit for GI's business because it is just too big a % of total to be relied upon and grow long-term (GI was 34% of revs last qtr). Scientific-Atlanta will supposedly be a big customer (and ramp nicely) this quarter but the concentration issue will continue to plague BRCM.

Until we get a better entry-point, I don't want to bother with BRCM despite good upside to estimates. Looking out to 2001, this is a $1 billion revenue company and news flow should be good. Voice over cable could happen and BRCM would supply chips for this... That would be good news flow.

btw, the 200-day moving average is about $43 and the stock is $63 today.... No hurry, IMO but BRCM is a probable long-term winner. The company just has too many focused, smart people to bet against.
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