We recently maintained our Neutral recommendation on
Broadcom is focused on the most innovative technologies related
to connectivity, bandwidth and content. The continued expansion of
pay-TV and Internet access services internationally, especially in
China and India, continues to provide significant opportunity for
growth. The Broadband Communications business continues to grow,
propelled by global adoption of high-definition pay TV services and
increasing consumer preference for HD content
Broadcom is also well positioned in the fast-growing wired and
wireless communications markets, with the latest technology
solutions for a growing number of connected users that are
demanding more content and bandwidth. In particular, strong demand
for smartphones and tablets is driving growth for Broadcom,
particularly from customers like Samsung and
Additionally, the market for wireless connectivity devices is
expected to grow, driven by increasing demand of smartphones,
tablets, netbooks and digital TVs. Management remains keen on
expanding the wireless market, primarily in the 2G and 3G spaces.
Broadcom also expects to expand into the 4G market by 2013.
Meanwhile, in the Infrastructure and Network business, demand
for video and data continues to outstrip expansion and capacity.
Broadcom expects strong adoption of 10-gigabit products by data
centers and enterprise customers to continue, driving strong
Although we are positive on Broadcom's product leadership, solid
financial performance in the last few quarters and strong cash flow
generation, margins continue to be under pressure. This is
primarily due to consistent acquisitions and accelerated new
Earnings estimates have moved up significantly after the company
reported better-than-expected results in the fourth quarter of
2011. We await a better entry point and, therefore, continue to
maintain our NEUTRAL recommendation on the stock. Our
recommendation is supported by Zacks #3 Rank, which translates into
a short-term rating of Hold.
BROADCOM CORP-A (
): Free Stock Analysis Report
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