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

To: chojiro who wrote (5327)	2/1/2001 7:51:34 AM
From: Stoctrash	Respond to of 6531

How come nobody posted this? I somehow missed this ...on the bright side, Henry did talk to HERB as many CEO's refuse. =========================== " Broadcom Gets Broadsided: A Chat With CEO Henry Nicholas By Herb Greenberg Senior Columnist Originally posted at 6:30 AM ET 1/26/01 on RealMoney.com Fried-Day 1: Broadcom gets broadsided: The last bastion of tech faves, Broadcom (BRCM:Nasdaq - news), continues to sink in the wake of the company's earnings, which beat estimates. It was down 20% Thursday alone. What, pray tell, could investors not have liked? Beneath the robust earnings was growth that, as this column suggested last week, might not be as buoyant as it would appear. Related Stories Specifically, analysts zeroed in on two things: A slowdown in sequential growth, which rose just 18% last quarter vs. 30% the prior quarter. That slowdown, however, was already expected. What wasn't expected was guidance of 9% to 10% of revenue growth for next quarter, excluding this month's acquisition of ServerWorks. (Not the comforting kind of trend that growth-oriented investors want to see at a company that trades at 67 times this year's expected earnings.) What also wasn't expected was that 3Com (COMS:Nasdaq - news), which itself has been having trouble, would suddenly shoot up to 22% of sales from 13% the prior quarter, while sales to Cisco fell. Made some analysts wonder whether 3Com, itself a Broadcom investor, helped Broadcom find a home for some of its merchandise. "That's ludicrous," Broadcom CEO Henry Nicholas says. "What happened at 3Com is the result of what we've been working on with them since the second quarter of last year ... (for) significant new products." Well, then, what about all of those acquisitions over the past two years of businesses outside Broadcom's core business? "People are looking at us like we sell apples, and that now we're acquiring companies that sell oranges ... they're saying we're trying to offset the decline in the apples business with the orange businesses. That kind of analysis fails to understand what we're really doing. We will then sell a genetic hybrid that is neither apples nor oranges." OK, then what about the sequential slowdown? Put the blame, Nicholas says, on the "undisputed" economic slowdown and a "delay in the significant product transition from broadcast-only set-top boxes to interactive boxes." (see ...even "The MAN" admits it.....but wait Henry in the CC you were laughing how great things were, what gives...Are you hungry like Chambers and ready to EAT those words???) Shipments of the new boxes, he says, will start toward the third and fourth quarters of this year, during which time "silicon content will triple." Nicholas says he's frustrated by the beating his stock has taken. (This was before it was dragged down even further by PMC-Sierra's (PMCS:Nasdaq - news) purely pessimistic conference call.) He insists this is just another transition, just like the one in 1999 with cable modems that took a year to resolve itself, and in the end, Broadcom will sell more chips into newer generation products. He seems sincere enough, but so do most company execs I talk to. And he may very well be right. We won't know until after the fact. Either you take him at his word or you don't. Either you listen to shorts who say competition is headed Broadcom's way and that no matter how you slice it, the company's glory days are over, or you don't. If the shorts are right, the stock (they believe) heads much lower. If Nicholas is right, his stock eventually recovers lost ground. The key word is "eventually," and right now, with PMC's plunge and the sales slowdown at Broadcom, "eventually" looks far in the future.

To: chojiro who wrote (5327)	2/1/2001 10:40:57 AM
From: John Koligman	Read Replies (1) \| Respond to of 6531

Gee, I just happened to see some comments in today's WSJ that tend to support what Fred said... Regards, John <ggg> Investment Decline And new numbers out Wednesday show that investment did drop in last year's fourth quarter. The government reported that the quarter's real, or inflation-adjusted, growth in gross domestic product slipped to an annual rate of 1.4%, its slowest pace since 1995. Household consumption, which makes up two-thirds of total economic spending, advanced at a respectable 2.9%. But business investment on equipment and software actually fell at a 5% rate -- a dramatic reversal from 21% growth in the first quarter of 2000. A big December drop reported last week in orders for capital goods, excluding aircraft and defense, suggests the capital retrenchment isn't over. That's being felt by companies like Cisco Systems Inc., the giant Internet-gear maker in San Jose, Calif. "In November, when we first started to see a slowdown, we thought it would be a blip -- it looked like it wouldn't affect us," Cisco Chief Executive John Chambers said Wednesday, according to Dow Jones Newswires. "But then in early December it was obvious that things were slowing down with many of our customers much faster than people anticipated. I became concerned when the Fed didn't move, but now they're moving."