The major strength of the company comes from the basket of Communication technology it has invested in, and its ability to integrate them into 1 single chip mixed signal CMOS solution.
example: BCM4325. This single chip has 4 radios.. (1 WLAN 2.4Ghz, 1 WLAN 5ghz, 1 Blue tooth, and 1 for FM (both Transmission and reception).
Now there are very few companies in the world which can match this engineering feat. (TI and Marvel being the only 2 competitors with such capabilities)
The company is focussed only on Network communication Devices but its penetration in the Cellphone market is negligible. So growth of BRCM largely depends on its ability to displace TI and Marvel from this area.
1) As a company, our revenues are expected to grow by around 30% yoy
2) Although the balance sheet is in a mess primarily due to the 2.2 Billion dollars of paper loss, it has not made any dent to the Revenue
and Profitability of the company (2007 onwards)
3) The company believes in its employees.
4) One of the unique strength of the company is Its fabless model and its ability to switch Fabs. This is what enables it to get the best price and give traditional giants a run for their money.
5) As discussed earlier, its ability to put different technologies together in one single complete package.
1) If there is a US recession, nobody is going to upgrade their networking hardware.
2) The stock is trading at a PE of 51 and a forward PE of 43.
3) Can you trust the Management?
4) Marvel and Broadcom have almost the same principles and strength. So on a long term I expect only 1 of these 2 aggressive companies to survive.
5) For a company with an Market Capitalization of 18 Billion, 1.5 Billion dollar buyback war chest is something disturbing. (But good news for investors, that should keep the stock from falling.)