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

To: Richard Tai who wrote (1292)	4/16/1999 11:39:00 PM
From: Robert S.	Respond to of 6531

From cyberstocks: CYBERSTOCKS REPORT - WEDNESDAY, APRIL 7, 1999 Broadcom - An Undervalued Internet Stock? Reports of Broadcom's death have been greatly exaggerated. by Neil Sandhu Myth #1: Intel's acquisition of Level One Communications signals the death knell for Broadcom (NASDAQ:BRCM). The Truth: Intel's acquisition demonstrates its realization that the market for chips in communication devices is where the real growth will be in the coming years. Whether it can dominate a market in an area in which it has, until now, been slow to respond remains to be seen. Traditional technology companies have not fared so well in embracing the fast-paced world of the Internet. Take a look at Microsoft's efforts in the online world. Despite predictions that Microsoft's entry into the online world in 1995 would signal the demise of America Online, Microsoft has been far too slow and ineffective in combating much more nimble and net-savvy competition such as AOL and Yahoo. Myth #2: Conexant, the recent Rockwell Semiconductor spinoff, has far superior technology and will crush Broadcom. The Truth: Conexant's technology may be good, but it is at least debatable as to which company has better technology. Even so, Broadcom has a great management team in place focused on increasing shareholder value as well as some of the best engineering talent in the chip world. Broadcom is currently a leader in providing chips to the fastest growing segment of the market. In the technology world, the leaders usually remain leaders. On the other hand, up until very recently, Conexant had been losing a great deal of money. Not so with Broadcom. Additionally, Conexant develops a wide variety of chips and some of these are in technologies that are expected to grow much slower than the broadband market to which Broadcom is so singly devoted. Finally, the best technology does not always win in the technology world. Take a look at Apple and 3Com, who, at least earlier in their histories, possibly had better technology than rivals Microsoft and Cisco. Let's take a closer look at Broadcom. It has been growing at a blistering pace over the last year in an industry that is in its very early stages. If you believe that we are in the early innings in the internet ball game, then the broadband access game has not even begun. This market is expected to grow enormously over the next few years and Broadcom has the bases covered. The company provides chips for the broadband communications markets, including cable set-top boxes, cable modems, high-speed networking, direct broadcast satellite and terrestrial digital broadcast, and digital subscriber lines. While the rest of the chip market suffered from lackluster growth last year, Broadcom's revenues increased 450% and it gross profits increased 425% from the previous year. Additionally, the company actually earned money last year. In fact, it consistently blew past analysts' earning estimates. What does the future hold for Broadcom? With a rebounding overall chip market and a focus on providing chips to the fast-growing communications markets, Broadcom seems to be at the right place at the right time. Technology is moving away from the PC as the center of the technological world towards a world in which the communication lines dominate and the PC is largely a commodity. Broadcom is perfectly positioned to take advantage of this fundamental shift. Broadcom has developed key alliances and agreements with other broadband players including Nortel Networks, Scientific Atlanta, General Instrument, and 3Com, to name a few. Currently, Broadcom sports a forward PE slightly in excess of 100. Yet, it is growing at a far faster rate. If Broadcom continues to execute as it has, it looks downright cheap at these levels, especially compared to the bloated valuations of many of the second-tier, money-losing Internet stocks. Broadcom should be viewed as an Internet infrastructure stock, along the same lines as Cisco. Of course, it is far too premature to compare Broadcom to Cisco. Inevitably, Broadcom will face increasing competition in the broadband market, but currently it seems to be well positioned to fight off such threats. In any case, there is probably room for more than one company to thrive in this market. However, if one had to choose one company that would emerge victorious, it would be difficult to bet against Broadcom. In fact, it does not take too wild an imagination to envision a world five to ten years from now where Broadcom dominates a market that is far bigger than the market that Intel currently dominates. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. This column merely represents the current views of a contributing writer to cstocks.com, who currently maintains a long position in Broadcom. Such views and positions may be changed at any time, without prior notification. We invite readers to comment on the column at cstocks@mygo.com. Contact us at:cstocks@mygo.com Copyright © 1999 cSTOCKS.com cstocks.com

To: Richard Tai who wrote (1292)	4/17/1999 3:49:00 AM
From: Gangyi Feng	Respond to of 6531

Mark Edelstone raised BRCM to outperform, target $80 several weeks ago.

To: Richard Tai who wrote (1292)	4/17/1999 7:04:00 AM
From: Keith A Walker	Read Replies (1) \| Respond to of 6531

I get the Morgan Research Reports and the last time they had updated BRCM, it was upgraded to OUTPERFORM. I think the Morgan analysts tend to be a little conservative. I got part of my position blasted away yesterday due to a couple of covered calls I wrote (not the best way to go), but, wrote two naked May 90 puts. I figure it is a good way to back into the stock. If nothing else, a good pop, and you capture the premium and any gain on its way to 90. Should we tank after earnings, well, you make it up in the long run. Best of luck, Keith