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Broadcom -
Turbulence Ahead? Independent Buy-Side Research By The-Adviser.com - |
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SERVICES WHY US |
Analyst
is MD Porcelain - Update
New
York 10/08/00
- As
previously discussed, the company has closed on its acquisition of Silicon
Spice, a leading developer of gateway and carrier access chipsets,
software and development tools for high-density voice, fax and data packet
transport over wide area networks (WANs). The acquisition continues
Broadcom's growth strategies and move into additional technology markets.
The stock market correction continues to negatively impact technology valuations and with no surprise, this downward trend has resulted in a slight decline in the price of Broadcom's stock. Broadcom is currently priced at $227down from its high of $274. Based on the markets turbulence, we believe that Broadcom is susceptible to additional profit taking activities and have lowered our short-term outlook to AVOID. We believe that current market activities will result in a slowdown in growth acquisitions or an increase in shares offered to potential sellers. Broadcom has previously shown a remarkable ability in retaining key employees from acquisitions. In fact, not one CEO from any of its acquisitions has left. Broadcom retains employees by offering them options and other stay-on bonuses. Market conditions will require higher dilutive retaining activities. Our long-term outlook on the stock remains positive. Broadcom is a leading technology company and view any short-term weakness as a long-term buying opportunity. We reiterate our long-term rating of BUY. The stock remains an aggressive technology play for long-term investors who can hold the security for three to five years. Our earnings estimates are listed below:
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