) is willing to pay $164 million to acquire Long Term Evolution
(LTE)-related assets from Renesas Electronics Corporation's
affiliates. Renesas is a leading supplier of flash
microcontrollers. The move is aimed to accelerate the launch of
Broadcom's first multimode, carrier-validated LTE chip platform
in early 2014.
BROADCOM CORP-A (BRCM): Free Stock Analysis
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This acquisition strengthens Broadcom's presence in the rapidly
growing LTE market with a production-ready, carrier-validated
system on chips (SoC). Broadcom's chips integrating Wi-Fi and
Bluetooth technology are used in top-tier smartphones and
Post-acquisition, Broadcom will benefit from a dual-core LTE
(chip) that is suitable for volume production and is
carrier-validated by leading global operators in North America,
Japan and Europe. The acquisition will be dilutive to fourth
quarter adjusted earnings per share by 12 cents and by 10 to 15
cents for fiscal 2014. However, the transaction is expected to be
accretive to earnings in 2015.
Additionally, Broadcom also updated its guidance for the upcoming
quarter. It narrowed its revenue guidance range to between $2.08
billion and $2.18 billion from its previous range of $2.05
billion to $2.2 billion. GAAP and non-GAAP product gross
margins are expected to be in the range of 50 to 100 basis
points. GAAP and non-GAAP research and development, and selling,
general and administrative expenses are expected to be
approximately $5 million to $15 million and flat to up $20
Based in Irvine, CA., Broadcom is engaged in designing and
marketing semiconductor components of network voice, video, and
data traffic for various applications. The company continues to
drive innovation and engineering excellence across a broad range
of communication end markets to help its customers enhance device
performance and overall efficiency.
Broadcom currently has a Zacks Rank #4 (Sell). Other stocks that
look promising and are worth a look are
Cypress Semiconductor Corporation
TriQuint Semiconductor, Inc
), each carrying a Zacks Rank #2 (Buy).