Barron’s has rightly pointed out that there are two schools of thought on the near-terms future of chip company Broadcom (BRCM).
Those in the first camp think that the bad news on Broadcom is out now that its big customer Motorola (MOT) has said that the next quarter will be poor. Further, Broadcom is gaining traction in the wireless chip market which used to belong to Qualcomm (QCOM) and Texas Instruments (TXN).
On the other side of the fence, the view is that Motorola’s troubles may only be at their beginning. What hurts the big handset manufacturer will continue to hurt Broadcom. This analysis seems more compelling.
Among the large handset companies, most researchers believe that Sony Ericsson will continue to do well by focusing on the high end of the market. Nokia (NOK) continues to increase its lead as the industry’s largest company, doing well in fast growing markets including China and India. Motorola’s success with its RAZR model is over, and it cannot seem to find a suitable replacement. Unit sales could be hurting at MOT for some time to come.
Not good news for Broadcom. Not good news at all.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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