Broadcom's Exit From Wireless Unlocks HomeKit Opportunity

NEW YORK (TheStreet) -- Since Broadcom's (BRCM) announced this week that it is exploring "strategic alternatives" for its struggling cellular wireless business, shares of the semiconductor giant have surged 18%.

The stock -- which was trading at $37.71 late Friday morning, up 10 cents -- is up 27% year to date, compared with a 3.4% rise for the Nasdaq Composite index.

During the last two years, Broadcom's wireless business has been losing market share to market leader Qualcomm (QCOM) and to newcomers such as Avago Technologies (AVGO).

The reason Broadcom has put its wireless business on the block at this time may have something to do with this week's Apple (AAPL) app developer conference, where Apple announced HomeKit, a system that will allow users to control home appliances such as thermostats and lights via an app.

The smart devices will require connectivity, which is where Broadcom comes in. Broadcom, which Apple listed during its conference keynote as a partner, may be able to capitalize by designing chips to integrate home devices/appliances to support HomeKit.

Broadcom has already designed chips for Apple partners to build devices such as garage door openers; now it sees a new opportunity knocking on the doors of every smart home in the world.

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 At the time of publication, the author was long Apple.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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