BRCM just dropped the A Bomb on SRCM - Turn out the lights
The short squeeze is all SRCM has at this point, BRCM - as well as the rest of the momentum in the industry - is all moving away from SRCM at lightspeed. I would not want to be left holding this stock when the dust settles and the squeeze is over....
Broadcom to Unveil Chip That Melds
Web Pages and Television Pictures
By FREDERICK ROSE
Staff Reporter of THE WALL STREET JOURNAL
IRVINE, Calif. -- Broadcom Corp., in what could be a big step forward for interactive television, is expected to unveil a single computer chip that melds Web pages and television pictures on TV screens.
A few systems, notably Microsoft Corp.'s WebTV Networks Inc., already can show Internet material on TV screens instead of the more expensive computer monitor. But Broadcom believes its chip to be a breakthrough, opening an era when an electronic box can seamlessly intermingle a dozen or more scenes from TV channels, Web sites, and even a videocassette or digital-video-disk movie on an ordinary television screen.
The effect, much like Microsoft's Windows on a personal computer, can be sized and arranged as a user wants. Sports enthusiasts, for example, could watch several events and Web sites at once, analysts said.
In Development for Two Years
Henry T. Nicholas III, president and chief executive of the Irvine, Calif., company, said it plans to unveil the chip soon, possibly as early as Monday, adding that the design has been under development for two years at a cost of "millions of dollars," with a team of more than two dozen people. Mr. Nicholas declined to be more specific, saying the design became possible when Broadcom brought together engineers from a number of companies where key technologies had been maturing.
Broadcom's new silicon circuitry shuttles complicated mixes of analog and digital signals both into and out of the chip, rearranging images by internal logic. "This is an extraordinarily powerful chip," said Gerry Kaufhold, an analyst with Cahners In-Stat Group, based in Scottsdale, Ariz., who has been briefed on the design.
Broadcom, which went public earlier this year, appears to be continuing a series of successful computer communications chips. Its products range from heavy-duty corporate networking devices to cutting-edge chip designs for use in homes. Most recently, the company announced it had shrunk all needed circuitry for a cable-TV modem into a single chip. That cable-modem chip, in fact, may be coupled with the newly empowered set-top box, providing an ultra-high-capacity connection to the home to go along with interactive services. The company's stock, which was launched at $24 a share in April, closed Friday at $86.50, up $2.25 in Nasdaq Stock Market composite trading.
The Race Is on
Interactive television has become a huge focus both for cable companies such as Tele-Communications Inc. and for technology concerns such as Microsoft. While chips of this type could be placed inside future TV sets, initial buyers are expected to be the makers of the about eight million set-top boxes sold to cable companies each year.
That means Broadcom will need to race to have its circuits included in the next generation of such boxes, which are slated to be on sale by mid-1999. Broadcom's expected initial price of about $21 each in lots of 100,000, however, has raised some eyebrows in the industry: While the concept is attractive, "that's too expensive," said Seamus McAteer, an industry analyst at Jupiter Communications LLC in New York.
But supporters of Broadcom's design argue it eliminates the need for certain other chips. The cost for a whole set-top box -- expected initially to go for $350 -- might increase by just $5, Mr. Kaufhold figured. He also noted that Broadcom's design doesn't limit the chip's use to cutting-edge digital-cable service. The chip could form the basis of "super" boxes for analog cable systems already in use that would give them some of the look of digital networks, Mr. Kaufhold contended.
Squares Vs. Rectangles
In part, the challenge of Internet displays on ordinary TV screens has been different ratios of the image. While computer-driven Internet pictures are made up of square blocks, or "pixels," television's blocks are rectangular. Broadcom's new chip design recalculates these ratios in real time and uses other algorithms to make print more legible on the TV screen -- a longstanding problem with computer images on TV.
That could be a boon even for services such as WebTV, which uses central computers to store thousands of reworked Internet pages, a cumbersome process. A spokeswoman for the company says WebTV already has about 500,000 users in the U.S., Canada, and Japan.
"There are things out there that do some of what Broadcom's chip does," said Cynthia Brumfield, an analyst at Paul Kagan Associates Inc. "But the Broadcom chip appears to refine all of this."
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