Communications-chip maker Broadcom
What analysts say:
- Buy, sell, or waffle? A total of 23 analysts follow Broadcom, with 16 of these currently giving a buy rating. Another six say hold, and one says sell. Broadcom also holds a four-star rating (out of five) with more than 460 opinions in the Motley Fool CAPS community.
- Revenue. Based on company guidance, the average analyst sees quarterly revenue ticking up 3% to $929 million compared with the same quarter last year.
What management says:
Broadcom braced investors for what sports teams call a "building year," as the company intends to sacrifice near-term profitability for (hopefully) long-term gains. Aside from margin squeezes from the usual competitive threats, such as Texas Instruments
What management does:
"Sacrifice" is a pretty accurate description of Broadcom's profitability, as the company's margins have been spiraling downward on increased expenses.
|
3/06 |
6/06 |
9/06 |
12/06 |
03/07 |
06/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
52.9% |
52.4% |
51.4% |
51.3% |
51.1% |
51.1% |
|
Operating |
15.8% |
13.9% |
11.4% |
6.8% |
4.9% |
2.9% |
|
Net |
13.9% |
15.8% |
14.6% |
10.3% |
8.8% |
6.9% |
One Fool says:
Broadcom investors have to have faith that the millions the company is spending now will convert into substantial revenue down the road. Broadcom has put years of R&D effort into its recently announced third-generation (3G) chip for handsets, and it will take several more quarters to see if the money spent building this single-chip solution pays off for investors. The company has a good track record of making wise investments in large markets, though, and recent news indicates its efforts may already be paying off.
While Motorola
