This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Broadcom's Back on the Offensive

NEW YORK ( TheStreet) -- If you ever had doubts as to the "cutthroat" nature of some industries, you should look no further than the tech sector -- particularly in the semiconductors, where rivals want nothing more than to put each other out of business.

While you'll get no argument from me that Qualcomm (QCOM - Get Report) deserves to be considered as the gold standard among the group, it's nonetheless remarkable how quickly investors have hopped off the Broadcom (BRCM - Get Report) bandwagon.

I'm not going to blow smoke and tell you that all is well with the company. The recent 7% growth in the mobile/wireless business, which fell short of estimates by nearly 10%, shouldn't be ignored.

But I don't believe that this one quarter has now relegated Broadcom to the lower-tier chip class, which is occupied by (among others) Advanced Micro Devices (AMD - Get Report). And if Broadcom's recent acquisition serves as indication, the company fully intends to get on the offensive. It is also clear that under no certain terms does management plan to cede the mobile market to Qualcomm.
[Read: <a target="blank" data-add-tracking="true" href="http://www.mainstreet.com/node/29276"><em>Secret Swiss Bank Accounts Have Cover Blown</em></a>]

In a deal that went relatively unnoticed, Broadcom acquired LTE-related assets from affiliates of Renesas Electronics for $164 million. LTE, which stands for long-term evolution, is a communication standard for mobile devices, such as those produced by Apple (AAPL - Get Report) and Samsung (SSNLF). Given the lack of attention that this deal has gotten, it seems as if the Street continues to underestimate this management team.

Essentially, Broadcom is gaining assets that are industry-tested and ready for volume production today. Not to mention, these included dual-core LTE SoC (system-on chips). What this means is that, although Qualcomm's Snapdragon S4 continues to be the most widely used chip on the market, Broadcom's no longer just chopped liver. And management demonstrated strong confidence that it can harvest value from this transaction.

The Street, meanwhile, didn't share in the optimism. But given that these newly acquired LTE assets are already carrier-validated by leading global operators in North America, Japan and Europe, investors shouldn't discount the fact that Broadcom's ability to integrate circuit components onto a single chip has just meaningfully improved.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SSNLF $875.00 0.00%
AMD $1.85 0.00%
AAPL $113.29 0.00%
BRCM $51.79 0.00%
CSCO $26.00 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs