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

To: ftth who wrote (436)	11/8/1998 5:32:00 PM
From: Trader Dave	Respond to of 6531

There was just a secondary offering at $69, the vast majority of which was insider selling. (2.6 million of 3 million shares) you can pick up a prospectus from one of the bankers. Nonetheless, another 4 or so million shares come off lockup on November 13th and another 26 million come off lockup in February. We'll see what the insiders continue to think about valuation then. Pat, I don't dispute your comments that the company is a good one with bright prospects. However, they have a small number of very large customers and their target markets have extremely rapid product cycles. We'll have to agree to disagree, but I think the valuation has nothing to do with the risks inherent to the story. What happens if they lose a design in the wildly competitive networking space? What happens if the uptake on cable modems, xdsl technology is slower than anticipated? What happens if price pressure appears more suddenly or with more intensity in any of their target end markets. The valuation does FULLY discount the opportunities. At this point you have the benefit of a fairly limited (but increasing) float and the power of merill lynch's retail distribution. Don't count on the confluence of those two factors sticking around for long. There are companies whose prospects are every bit as bright as broadcom's selling for a fraction of the valuation. We're doing work on Uniphase right now as a for instance (same dominance in the market for photonics infrastructure), and at 30x 1999 I think it's not cheap, so I'm waiting. TD