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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (53699)	9/13/2011 5:02:15 PM
From: Donald Wennerstrom	1 Recommendation Read Replies (1) \| Respond to of 95525

Broadcom Eyes Wireless Growth With NetLogic Purchase By PATRICK SEITZ, INVESTOR'S BUSINESS DAILY Posted 09/12/2011 06:20 PM ET Broadcom's planned purchase of NetLogic Microsystems will amp up competition in the wireless infrastructure chip market and might spark more acquisitions in this field. Broadcom ( BRCM) said Monday that it would buy NetLogic ( NETL) for $3.7 billion. The Irvine, Calif.-based company agreed to pay $50 a share for NetLogic, a 57% premium over the company's closing stock price of 31.91 on Friday. Broadcom expects the deal to close in the first half of 2012, pending government approvals. It predicts that NetLogic will add about 10 cents a share to its earnings on a non-GAAP basis in 2012. Broadcom and Santa Clara, Calif.-based NetLogic develop chips for high-speed wireless networks. The acquisition will round out Broadcom's network infrastructure product offerings to help it better compete with Qualcomm ( QCOM) and others. "It makes Broadcom a lot more competitive," said Vijay Rakesh, an analyst with Sterne Agee. "Broadcom had to make a move because somebody else probably would have taken NetLogic." The Broadcom-NetLogic deal likely will prompt Marvell Technology ( MRVL) to buy Cavium ( CAVM) or EZchip Semiconductor ( EZCH), says Gary Mobley, an analyst with Benchmark. EZchip would be the logical choice for Marvell since the two companies already have a product relationship, he says. "It compels Marvell to go out and make some acquisitions," Mobley said. Mobley has a buy rating on Marvell, Broadcom and EZchip and a hold rating on Cavium. Broadcom and Marvell are the two leading providers of chips for Ethernet switches, used in many computer networks and communications systems. With NetLogic, Broadcom gains a portfolio of products to complete an Open System Interconnection (OSI) networking framework, of which there are seven layers, Mobley says. "Ethernet switches have to do with layers one and two of the OSI framework," he said. "And what Broadcom is doing is moving up to layers three through seven with this acquisition of NetLogic." Broadcom shares fell 1.1% to 33.06 on Monday. NetLogic jumped to an all-time high, closing up 50% at 48.12 . Other wireless chip companies rose on expectations that they could become acquisition targets. Cavium shares climbed 7% to 33.10. EZchip leaped 11% to 32.65. Broadcom's purchase of NetLogic will let it integrate and sell more complete systems for wireless communications, Craig Berger, an analyst with FBR Capital Markets, said in a research note Monday. "Broadcom is positioned to someday be the world's second-largest baseband supplier behind Qualcomm, with the 3G/4G multimode baseband chip market likely to coalesce around Qualcomm, Broadcom, Intel ( INTC) and potentially ST-Ericsson," Berger said. Marvell also could join this group, he said. Berger sees Broadcom's annual baseband chip sales growing from $500 million in 2010, to $2 billion to $5 billion over time. Berger has a buy rating on Broadcom. "This transaction delivers on all fronts for Broadcom's shareholders — strategic fit, leading-edge technology and significant financial upside," Broadcom CEO Scott McGregor said in a statement. "With NetLogic Microsystems, Broadcom is acquiring a leading multicore embedded processor solution, market leading knowledge-based processors, and unique digital front-end technology for wireless base stations that are key enablers for the next generation infrastructure build-out." The deal will better position Broadcom to provide end-to-end communications and processing platforms for networks, he says. Broadcom was a top-performing stock in 2010, but has been trending down since early this year. Broadcom shares rose 41% in 2010, but are down 23% in 2011. NetLogic climbed 36% last year and was up 2% this year before the merger deal. NetLogic shares peaked at 43.71 on May 2 before heading south, bottoming at 25.83 on Aug. 23 before rebounding. Buying NetLogic is a good use of Broadcom's cash, Mobley says. By the end of this quarter, Broadcom expects to have $4.2 billion in cash and cash equivalents on hand, up from $3.8 billion at the end of the second quarter. It is generating $300 million to $500 million in free cash flow a quarter. Marvell also generates a significant amount of free cash — about $200 million each quarter — and had $2.4 billion in cash as of July 30. investors.com

To: Donald Wennerstrom who wrote (53699)	9/13/2011 7:19:45 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 95525

<14 months since the (bookings) peak occurred in July of 2010> Yes, that was the highest month. However, bookings have been in a high plateau, just below the peak, until 2 months ago. Any bookings over 1.5B$ represents peak industry conditions. So, really, the downtrend has just started. Also: the peak in bookings doesn't coincide with the peak in stock prices. However, the trough in stock prices does happen while bookings are at (or very near) trough values. That is especially true, since the troughs have recently been U-shaped, instead of their pre-2000 pattern of V-shaped. So I don't think I will miss the bottom, if I wait till bookings stop going down.