For Mr. Schwartz - first some ratios:
BRCM CUBE
p/e 142.7 18.1
Earnings/sh $.49 $1.16
Estimated
Growth rate 48% 25%
price to sales 23.45 2.47
Also, keep in mind that BRCM's sentiment is bullish. It's priced for perfection. CUBE's sentiment is at best luke warm with plenty of room to improve
Why does BRCM have anything to do with CUBE? Besides the obvious that both company's biggest potential market is the same - STB's, three years ago, CUBE enjoyed a similar sentiment BRCM is enjoying now. The market thought - correctly - that CUBE had pioneered a proprietary technology and that demand for it was going to go through the roof. The market was correct about the latter but not the former. While everyone was in denial, competition arrived - quickly. After that, regardless of how strong CUBE's earnings were, the market knocked the stock down. And you know what? The market was right. It wasn't that CUBE's technology didn't matter - it did. What mattered was the competition was eroding their pricing power rapidly. As a result, CUBE has suffered unfairly. CUBE is STILL the leader in a market that is just now starting to really take off. But the stock, in my opinion, is ABSURDLY undervalued.
If you think BRCM won't have competition then stay a bull. Again, BRCM is a great company. Well managed. Top talent. But competition will or HAS arrived (Rockwell spinoff, that company LU just bought). |
