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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: Patriarch who wrote (2300)	7/20/1999 8:17:00 PM
From: Brian1970	Respond to of 6531

A good perspective on BRCM, from the Individual Investor site: Look For Another Strong Quarter From Broadcom Tell us what you think in BRCM's Board. TODAY I. I. A N A L Y S I S iionline.com by Chris Bulkey (7/20/99) It looks like broadband IC provider Broadcom (NASDAQ: BRCM - Quotes, News, Boards) will surpass the high end of expectations when it reports second quarter earnings Wednesday. We believe that the company's cable set top and cable modem businesses remain strong, while the high speed networking business is gaining momentum. During the first quarter, there was an encouraging shift in Broadcom's customer mix, as Cisco Systems (NASDAQ: CSCO - Quotes, News, Boards) became a 10% customer for the first time coming in at 13% of total revenue. Cisco dominates the market for Fast Ethernet switching, which bodes well for the networking side of Broadcom's business. Like this Article? 3Com (NASDAQ: COMS - Quotes, News, Boards) is the other significant contributor to Broadcom's networking business representing 21% of first quarter sales. 3Com's choppy performance has been well publicized, but feedback from analysts indicates that the high speed connectivity business should show good growth sequentially, while the network interface card (NIC) segment continues to decelerate. There appears to be a consensus that the Fast Ethernet transceiver business will be able to offset any NIC softness. In any event, Broadcom has posted strong results over the past few quarters despite 3Com's lack of consistency. The cable set top box business should remain very strong for at least the next few quarters, as the digital cable deployment appears to be in the early stages of a prolonged ramp-up. Both General Instrument (NYSE: GIC - Quotes, News, Boards) and Scientific Atlanta (NYSE: SFA - Quotes, News, Boards) are Broadcom customers with General Instrument representing the highest percentage of total revenue. General Instrument accounted for 36.5% of first quarter sales, and while the number fell as a percentage of total revenue (due to a greater mix of networking business) absolute dollar amounts increased. Both General Instrument and Scientific Atlanta appear to be set to report solid second quarter results. Recently, Wachovia Securities analyst George Hunt raised both companies to 'strong buy' and lifted price targets significantly, as he believes that shipments will be strong. This echoes similar feedback we have received indicating that the cable set top business should accelerate from the first quarter in which Broadcom crushed consensus estimates. From a fundamental standpoint, Broadcom's results over the past few quarters do not indicate that momentum is decelerating. Sequential revenue growth has been strong, while gross margin improved sequentially 90 basis points in the first quarter. The gross margin improvement occurred despite some analysts' expectations for softness. Deutsche Bank Alex Brown analyst Thomas Bain in particular had expected gross margin to decline slightly. This shows that fear of pricing pressures causing management to give somewhat cautious guidance did not surface. Beyond the current business activity, Broadcom is also doing a good job of positioning itself for future growth. In May the company unveiled its Gigabit Ethernet transceiver chip, which represented a milestone in the high-speed networking market. The current standard in local area networks (LANs) is Fast Ethernet, which transmits data at 100 Megabits per second (Mbps). The new standard allows for 1,000 Mbps transmission, and according to the company is being used by leading OEMs to support the convergence of voice, video and data. The product is expected to start generating revenue in the third and fourth quarters. Broadcom has also made several acquisitions to augment its networking and Voice over IP capabilities. Acquisitions present risk, but in the high technology area it is often more cost effective to acquire a company with a significant technological advantage, as opposed to developing it in house. Cisco has been very successful with this strategy, and appears to have the set the standard for others to follow. There is no question that competition will intensify. At the least this will lead to lower margins in the long run, as more companies develop competing technologies. The key for Broadcom, over the long-term will be to develop the hottest technologies and build strategic relations, as the markets grow. Thus far Broadcom has been very successful at doing just that, and appears to have ample opportunity to accelerate growth in its current segments. Most analysts believe that the digital cable deployment has 3-5 years of expansion left, which leaves Broadcom well positioned in its most core market. As you can see from the acquisition front and new product development, the company is not resting on its laurels and is attempting become a leader in other broadband access markets. Bottom Line: Recent results from PMC-Sierra (NASDAQ: PMCS - Quotes, News, Boards) and Vitesse Semiconductor (NASDAQ: VTSS - Quotes, News, Boards) show that the broadband IC market is hot. Broadcom should show similar strength when it reports second quarter earnings. We expect the company to beat the $0.19 per share First Call consensus by at least $0.02 per share on Wednesday. Tell us what you think in BRCM's Board

To: Patriarch who wrote (2300)	7/21/1999 12:29:00 AM
From: Geof Hollingsworth	Read Replies (2) \| Respond to of 6531

From today's Venture Wire (FWIW): IRVINE, Calif.--Broadcom, a provider of integrated circuits for high-speed broadband communications, said it signed a definitive agreement to acquire HotHaus Technologies, a Vancouver, B.C.-based provider of embedded digital signal processing software for voice, fax relay, data relay, and telephony signaling voice-over-IP applications. Under the agreement, a Canadian subsidiary of Broadcom will issue exchangeable preferred stock for all outstanding shares of HotHaus's common stock. The deal is valued at about $280 million (C$414 million). HotHaus has received funding from Texas Instruments and Working Opportunity Fund, a venture capital firm managed by Growth Works Capital.