Broadcom Corp. (
BRCM) is a fabless company, designing and marketing semiconductor components that network voice, video, and data traffic for applications in digital cable and satellite set-top boxes, cable and digital subscriber line (DSL) modems, high-speed local area networks (LANs), metropolitan area networks (MANs), long-haul networks, wireless communications, server solutions, and many more areas.
BRCM recently reported revenues of $1.127 billion in Q4, up 9.7% year over year but down 13.2% quarter over quarter. Revenues from all the three product lines were down quarter over quarter due to weakening demand and inventory corrections by most customers.
Management expects the current economic slowdown to continue and negatively impact business as demand continues to decrease and customers adjust inventory. BRCM anticipates that it will receive $19.0 million in royalties under the
Verizon (
VZ) agreement in the first quarter of 2009. Revenues are expected to come down to $800-$875 million, including royalties from Verizon.
We maintain our Hold rating with a revised target price of $17.00.
