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Broadcom Corporation provides semiconductor solutions for wired and wireless communications. Its products offer voice, video, data, and multimedia connectivity in the home, office, and mobile environments. The company operates in three segments.

The Broadband Communications segment offers solutions for home, including cable, xDSL, fiber, satellite, and IP broadband networks to enable the connected home, such as set-top-boxes and media servers, residential modems and gateways, small and residential cells, and wired home networking solutions.

The Mobile and Wireless segment provides low-power, high-performance, and highly integrated solutions powering the mobile and wireless ecosystem that consists of Wi-Fi and bluetooth, cellular SoCs, personal navigation and global positioning, near field communications, voice over IP, and mobile power management solutions.

The Infrastructure and Networking segment offers highly integrated solutions for carriers, service providers, enterprises, small-to-medium businesses, and data centers for network infrastructure needs, including ethernet switches, physical layer devices, multicore embedded processors, knowledge-based processors, digital front ends for wireless infrastructure, switch fabric solutions, high-speed ethernet controllers, and microwave backhaul devices.

http://todaysbigstock.com/2013/12/12/br ... sdaq-brcm/

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ANOTHER MASSIVE TECH WINNER

Today's chart highlights one of the best uptrends in the market...

Regular readers know we are always looking for big secular trends to invest in. Since the invention of the personal computer and the cellphone, the demand for semiconductors has been growing... These little devices power most of the electronics we use today.

And with the rapid growth of smartphone users around the world, it's clear that "semis" are fueling a dominant, thriving tech trend.

We last checked in on this trend with the iShares PHLX Semiconductor Fund (SOXX). Today, we'll look at $87 billion industry leader Broadcom (AVGO). The company designs, develops, and supplies semiconductors and circuit boards.

Broadcom shares have soared in recent years. As you can see in the chart below, they're up nearly 520% since 2012, and they just hit new all-time highs.

Each time Broadcom sold off in recent years, the stock quickly rebounded and climbed to new highs. It's one of the best uptrends in the market today, and one that shows no signs of slowing down...

Source: Daily Wealth

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How Broadcom Is Becoming One of the Top Semiconductor Companies in the World

By Jon C. Ogg

Source: 24 7 Wall Street

http://247wallst.com/technology-3/2017/ ... Newsletter

Broadcom bids $103 billion for Qualcomm, open to going hostile

http://www.reuters.com/article/us-qualc ... SKBN1D61EO

(Reuters) - Chip maker Broadcom Ltd made an unsolicited $103 billion bid for Qualcomm Inc on Monday, setting the stage for a takeover battle that could reshape the industry at the heart of mobile phone hardware.

Qualcomm said it would review the proposal but the San Diego-based company is inclined to reject the bid as too low and fraught with risk that regulators may reject it or take too long to approve it, people familiar with the matter told Reuters.

Broadcom Chief Executive Hock Tan, who turned a small, chipmaker into a $100-billion company based in Singapore and the United States, told Reuters he would not rule out a proxy fight to convince shareholders to replace the board and accept the offer.

“We are well advised and know what our options are, and we have not eliminated any of those options,” said Tan, who has pulled off a string of deals over the past decade. “We have a very strong desire to work with Qualcomm to reach a mutually beneficial deal.”

...

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'What the Hock?'; Broadcom shares sink on shock software deal

(Reuters) - Broadcom Inc's (O:AVGO) surprise bid to buy software company CA Inc (O:CA) knocked $11 billion off the value of the chipmaker in trading before the bell on Wall Street on Thursday, with analysts struggling to find a clear rationale behind the deal.

Broadcom, which has mushroomed in value by buying out rivals in the past decade's surge in mobile phone production, agreed on Wednesday to buy mainframe software company CA for $18.9 billion in cash, months after President Donald Trump blocked its $117 billion mega-merger with Qualcomm Inc (O:QCOM).

While some analysts said the shift in sectoral focus might prove another masterstroke by Broadcom Chief Executive Hock Tan, the knee-jerk reaction of investors drove Broadcom stock 10 percent lower in premarket trading. CA rose 18.5 percent to $44.10.

"What the Hock?" analysts from brokerage Evercore wrote in a note. "We think investors will likely be disappointed at this deal, which seems more financial engineering/PE driven than due to any strategic rationale."

Broadcom's famously ambitious chief executive has built the company from a fledgling chipmaker to a global powerhouse through a series a ambitious deals, and is widely respected by Wall Street for his business acumen.

Susquehanna analyst Christopher Rollan said the foray into the software industry may have been driven by a lack of viable options in the semiconductor industry and increased regulatory scrutiny.

CA's main business is selling software for big, mainframe computers, in which it is second only to IBM (N:IBM).

But while that business generates cash flow of $10 billion a year, its revenue growth has been flat as more customers choose cloud services over old-fashioned hardware.

"While CA is a departure from Broadcom's core semiconductor business, it is consistent with its track record of acquiring out-of-favor, market leaders with high cost structures," Jefferies analysts said.

"Importantly, AVGO has consistently demonstrated its ability to drive costs down and margins of its acquisitions up, often measured in 1,000s of basis points," they said.

Some analysts speculated that Broadcom's ability to rein in costs would help it use CA as a platform to build a business in the software sector that simply offsets the risks of the highly-competitive semiconductor business.

"Management is showing its ambition to move beyond silicon to be that of an Infrastructure Technology company," Morgan Stanley (NYSE:MS) analysts said.

After the deal, the combined company would have roughly 71 percent revenue from semiconductors and 28 percent from software.

"We think many investors may not like it - at least initially - but this does open the door for a new angle to the story and further improves AVGO's capital return potential (we model $10/sh dividend in F19) in the meantime," UBS analyst Timothy Arcuri said.

Source: investing.com

https://www.investing.com/news/stock-ma ... al-1527206

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Mega-chip stock Broadcom loses $17 billion in value after Wall Street demolishes company's software acquisition strategy

Multiple Wall Street firms are questioning Broadcom's strategy to acquire a low growth software company.

On Wednesday after the market close Broadcom announced it had entered into an agreement to acquire software company CA Technologies for $18.9 billion.

by Tae Kim

Source: CNBC

https://www.cnbc.com/2018/07/12/broadco ... yptr=yahoo

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Broadcom Is Buying CA to Expand Into Infrastructure Software

by Sejuti Banerjea

Semiconductor giant Broadcom AVGO has decided to buy mainframe and infrastructure software provider CA Inc CA for $18.9 billion or $44.50 per share in cash, representing a 20% premium to the company’s closing price on Wednesday. Government approvals are pending.

Rationale for CA

CA hasn’t done so well in the last few years. Revenues have declined consistently between 2013 and 2016, more or less flat-lining last year and picking up in its fiscal 2018 due to the contribution from acquisitions. Gross profit shows a similar pattern.

While the EBIT has picked up this year, the consistently rising interest and taxes have depressed its earnings performance.

The company intended to modernize its solutions by incorporating automation, data, analytics and security into its products through organic product development or acquisitions with a customer focus.

It also recently announced a headcount reduction of 800 to align with its changing strategy.

Since Broadcom is a master at integrations, it makes sense for the company to turn the reins over to somebody with more experience. So there’s good reason for CA shareholders to cheer, which they did, sending shares soaring yesterday, after the news broke.

What’s In It For Broadcom

Broadcom on the other hand is a semiconductor company that has mainly grown by acquiring companies in the same industry and then trimming them down to maximize efficiencies. There isn’t much in its past to suggest that it would head into software next.

So investors are understandably concerned about how this integration will go and also, whether the company will succeed in its diversification-beyond-semis strategy. No wonder then that the shares plummeted following the announcement.

But there are some positives as well.

First, CA is in trimming mode, which works nicely with Broadcom CEO Hock Tan’s line of thinking. So some of the work that he would need to do is already being done.

Second, semiconductor deals of the kind Broadcom pursues are getting harder and harder to come by because of the significant amount of consolidation the industry has already seen. The current deals on the stage are very high-profile, intended to capture product roadmaps and including a higher element of risk. The payback period is also relatively more uncertain.

Third, software is the future. Even hardware companies generally have software integration units, but the way technology is advancing, software opportunities are opening up in every sphere of life as individuals, companies and other entities are all increasingly turning to the cloud with always-connected devices to store, process and retrieve their information that is then used in everyday decision making. For an acquisitive technology company to completely pass up this opportunity may not be such a good idea.

Fourth, CA’s mainframe business is likely to generate a steady flow of revenues with better visibility. The infrastructure market is big and expanding, so there’s room for multiple players to grow. Augmenting with other deals in the space could help Broadcom become an important player.

Conclusion

It’s a daring move for Broadcom, especially considering its unproven software capabilities and the price tag (roughly 4.5X its 2018 revenue). But the good thing is, it will be immediately accretive.

Another concern is whether Broadcom will be able to balance its cost-cutting itch with the need to invest resources in R&D because that is a software company’s life blood.

Whether it will succeed in this effort is anybody’s guess, but it’s a good time to try.

Source: Zack's

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Broadcom's $18.9 Billion CA Technologies Deal Does -- and Doesn't -- Make Sense

Broadcom isn't paying too much for CA, and can find ways to boost its bottom line. But CA faces some challenges, and the deal is outside of Broadcom's usual comfort zone.

by Eric Jhonsa

Though it's hardly a shock to see Broadcom (AVGO - Get Report) pursue another big acquisition, it's safe to say that few expected the target to be a 42-year-old enterprise software firm.

The move says a lot about how confident CEO Hock Tan and the rest of Broadcom's management team are about making a wide variety of tech acquisitions pay off if the valuation is reasonable and there are major cost savings to be had.

Nonetheless, it's fair to wonder if Broadcom is putting itself too far outside its traditional wheelhouse this time around.

On Wednesday afternoon, a couple hours after The Wall Street Journal reported that a deal is close, acquisition-happy Broadcom announced that it's buying CA Technologies (CA - Get Report) for $44.50 per share, or $18.9 billion, in cash. The price represents a 19.5% premium to CA's Wednesday close, and is equal to 16 times CA's fiscal 2019 (ends in March 2019) EPS consensus of $2.77.

Broadcom says the deal is expected to close in calendar Q4, and will be paid for with the help of $18 billion in new debt financing. The company had $8.2 billion in cash and $17.3 billion in debt as of April.

CA's product line contains dozens of enterprise software offerings. Collectively, these products handle everything from managing software projects to monitoring the performance of apps and IT hardware to testing app security to protecting against unauthorized data access.

In fiscal 2018 (ended in March), the company posted revenue of $4.24 billion (up 5%) and free cash flow (FCF) of $1.15 billion.

Broadcom, just four months removed from seeing the Trump Administration thwart its hostile bid for Qualcomm (QCOM - Get Report) , undoubtedly hopes to boost CA's FCF with the help of its trademark cost-cutting.

The company says it's now aiming for a long-term adjusted EBITDA margin of about 55% -- higher than both Broadcom's prior target of 48% and the 38% margin CA had forecast for fiscal 2019.

If prior acquisitions are any guide, Broadcom might also want to streamline CA's product line by selling assets deemed non-strategic. And to raise prices on CA products that possess high market shares, have limited competition and claim a high level of customer "stickiness."

Broadcom seems enthusiastic about CA's mainframe businesses.

Some of CA's mainframe offerings for developers and IT admins appear to fit this description. The company still gets over half its revenue from mainframes, and judging by the presentation Broadcom released after announcing the deal, the company sees this as a positive.

Also seen as a positive: The fact that CA's software and services bookings have an average duration length of more than three years, yielding a large base of recurring revenue streams.

Between cost cuts and potential price hikes, as well as a deal valuation that's moderate even before accounting for those things, the CA acquisition could very well pay off for Broadcom if CA continues to see a modest amount of positive revenue growth and Broadcom's management executes well on the deal. However, neither is a given.

In terms of growth outlooks, CA's software portfolio is a very mixed bag. Some of the markets in which CA has a strong presence, such as offerings for DevOps software teams, Agile code development, identity management and privileged account security, are seeing healthy growth.

On the other hand, mainframe software is a field that (while stable) is likely to see little to no long-term growth. And various other CA businesses face stiff competition -- often from cloud software upstarts such as ServiceNow (NOW - Get Report) and New Relic (NEWR - Get Report) -- and/or are being impacted by the adoption of cloud infrastructure services from the likes of Amazon.com (AMZN - Get Report) and Microsoft (MSFT - Get Report) .

Moreover, even if one feels that CA in theory has enough going for it to deliver low-single digit revenue growth in the coming years, it's perfectly reasonable to question whether it while doing so under the ownership of Broadcom, whose acquisition spree to date has revolved around buying suppliers of chips and hardware to OEMs and cloud giants.

To be fair, CA does have partnerships with some of Broadcom's major enterprise OEM clients, such as IBM , HP Enterprise and Cisco Systems. And -- in what's perhaps a sign that it's open to making additional software deals down the line -- Broadcom claims that pairing its products with CA's will create "one of the world's leading infrastructure technology companies."

Nonetheless, there are few or no product synergies between many of CA's offerings and Broadcom's current product line. And in terms of sales, R&D, distribution and much else, the enterprise software industry is a very different animal than the chip industry, or even some of Broadcom's enterprise-focused hardware markets such as Ethernet adapters and storage switches.

Perhaps Broadcom, which has made plenty of acquisitions pay off over its history, will make the CA deal pay off as well in spite of such challenges. But it's hard to blame Wall Street -- which, as the saying goes, hates uncertainty -- for being a little nervous this time around that it won't.

Source: The Street

https://www.thestreet.com/opinion/broad ... e-14648740

A NEW BREAKOUT FOR THE CHIPMAKER THAT POWERS YOUR IPHONE

Today, we're checking in on a huge technological trend...

Regular readers know we're always on the lookout for big secular trends to invest in. And right now, the trend in electronics is undoubtedly one of the biggest we've seen.

Smartphones, tablets, and computers continue to be a huge part of our everyday lives. And they all rely on little devices called semiconductors...

Broadcom (AVGO) is a $112 billion semiconductor maker. It makes the chips that power your favorite electronic devices, including digital and analog components – and it even boasts Apple (AAPL) as a client.

Having the largest consumer-electronics maker in the world rely on your semiconductors is great for revenue... In its 2018 fiscal year, Broadcom reported sales of $20.8 billion, an 18% increase from its 2017 fiscal year.

As you can see in today's chart, AVGO shares are moving higher. The stock is up almost 40% from its July lows, and it recently hit a new all-time high. As long as today's technology continues to rely on semiconductors, this company will succeed...

Source: Daily Wealth

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THE 'BIG TECH' TREND PRIMES THIS CHIPMAKER FOR BIG SUCCESS

Today, we're checking in on a company that's riding the tech trend higher...

The world is relying heavily on electronics these days... from smartphones, to laptops, to televisions. That's why semiconductors – the tiny but powerful chips that make each of those devices work – are such a crucial part of our lives. That's good news for today's company...

Broadcom (AVGO) is a $185 billion semiconductor designer and manufacturer. Its chips appear in many of our favorite devices. And just last week, the company announced that one of its chips enables the world's first Wi-Fi 6E phone, the Samsung Galaxy S21 Ultra.

This chip enhances phones' speed, connectivity, as well as gigabit capacity – which are also important improvements to make in the 5G rollout that's taking place right now.

As you can see, AVGO shares are surging today. The stock is up more than 160% since its mid-March lows. And as folks snap up the most advanced technology, semiconductor companies like Broadcom will continue providing the components these faster devices will need...

Source: Daily Wealth