We are maintaining our Neutral recommendation on industry
), ahead of its third quarter 2012 results, expected on October
For the third quarter of 2012, Broadcom projects revenues of
$2.0 billion - $2.15 billion. The growth is expected to be driven
by the Broadband segment. Infrastructure & Networking segment
and other Mobile & Wireless segment are also expected to
On an average, Broadcom, which competes with other bigwigs
), has surpassed the Zacks Consensus Estimate by 10.42% in the
last four quarters. The current Zacks Consensus Estimate for the
third quarter of 2012 is 56 cents, with no movement in either
direction in the last sixty days.
Earlier, the company reported better-than-expected results in
the second quarter of 2012. Broadcom Corporation posted a net
income of $160 million or 28 cents per diluted share in the
second quarter of 2012. Excluding one-time items, earnings per
share came in at 49 cents, easily beating the Zacks Consensus
Estimate of 43 cents.
Broadcom generated revenues of $1.971 billion in the second
quarter of 2012, an increase of 9.7% year over year and 7.9%
sequentially, and within management's projection of $1.9 billion
- $2.0 billion. Excluding the impact of acquisitions, revenue was
up 5% sequentially.
Smartphones continue to be growth drivers for the company and
management continues to gain traction at Samsung, China Unicom
and Vodafone. The ubiquitous demand for increased bandwidth for
IPTV services, HDTV broadcasting and high speed Internet access
continues to drive momentum for deploying fiber
Broadcom's product leadership, solid financial performance and
strong cash flow generation continue to be positives. Increasing
demand for smartphones and tablets and the ongoing convergence of
computing and communications should propel growth going forward.
We expect the company to drive further growth on the back of
increased traction in smartphones from China Unicom along with
introduction of new smartphones powered by Broadcom's near field
communications (NFC) chip solution for both connectivity as well
as mobile payment.
The recent acquisitions of NetLogic and BroadLight should
further expand the company's product portfolio.
However, we remain concerned about the margin pressure due to
the accelerated new product ramps, which typically carry lower
margins early in the product lifecycle, acquisition related costs
and business concentration.
We currently have a Zacks #4 Rank on the stock, which
translates to a short-term rating of Sell.
BROADCOM CORP-A (BRCM): Free Stock Analysis
QUALCOMM INC (QCOM): Free Stock Analysis
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