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

To: Patriarch who wrote (447)	11/13/1998 5:36:00 PM
From: Trader Dave	Read Replies (1) \| Respond to of 6531

Avtel is a ponzi scheme, tiny float, retail buyers, notice the trading shut down? who knows where it goes. Pat, you shouldn't compare brcm to these ridiculous internet frenzy companies. BRCM actually makes a profit! From a valuation perspective, you need to value it relative to its peers in the merchant semiconductor business. You can do that by comparing brcm's potential growth rates in the markets it serves versus the competitors and the markets they serve. However, you can't directly compare them since there is upside to the set top and cable modem business. Is the market for set top products larger and more stable than the build out of global WAN ATM and Sonet infrastructure? (My favorite little PMCS is getting more expensive every day, but it is still trading at well under 1/2 the valuation of brcm.) You must also compare the risks and product cycles in the respective businesses. Broadcom's got a good footprint in these emerging spaces. however, I have a few questions: Is there a risk of design losses in their partnership with 3com given that they compete with level one and lucent microelectronics in the highly competitive ethernet space? Will the adoption of cable modem, xdsl, and digital set top boxes happen quickly enough to justify current valuations? Are there obstacles to market acceptance such as confusion and uncertainty in the markets for these fancy new set top boxes since it's not resolved how they will support hdtv for instance? Once standards are resolved for things like cable modems, is there a risk of precipitous price declines and margin pressure if market acceptance ramps? Do you know the story behind the BCM7014 chip? Did you know it was designed in response to a general instrument RFP and rejected? I still see a lot of risks to the story, it's hard to predict the short term price swings. I would advise taking a balanced view. TD