Tomahawk, WI 8/06/2013 (Basicsmedia) – Broadcom Corporation (NASDAQ:BRCM) was founded in 1991. The company has opted to use Irvine, California as the location where it has pout up its headquarters. It is a provider of semiconductor solutions which are designed to resolve problems afflicting businesses which operate wired and wireless communications. The company has employed more than 11,000 full time employees. However, in the recent days, it has been noticed by many analysts that one has to take a deeper look at the company’s financials to see whether it is still a worthwhile investment or not. This is the query I seek to address here.

BRCM Major Competitors

The company services the needs of its clients located in various corners of the world ranging from Europe, Asia, Australia and North America. It has to do this while giving close attention to what its competitors are doing in the same market. Currently, it is in competition with Texas Instruments Inc, QUALCOMM Incorporated, and Infineon Technologies AG. When talking about market cap, it is worth noting that BRCM is only ahead of Infineon. It has the fewest number of employees compared with the other three, while its revenue is only better than that of Infineon.

2

This image shows the performance of the four main competitors.

It’s courtesy of www.seekingalpha.com

The net income for QUALCOMM Incorporated and Texas Instruments Inc is much better than that of BRCM. The two firms enjoy net income of $6.60 billion and $2.02 billion respectively compared with the $411 million of BRCM. Infineon has to contend with its own net income of around $354.75 million which is the least out of these four competitors. One has to understand one important factor about this company, and that has to do with the fact that its outlook has fallen short of that which was expected. The revenue and earnings per share may have increased, but not to the level which has been forecasted earlier.

BRCM Has a History of Making Poor Decisions

Just last year, in 2012 to be more precise, BRCM acquired NetLogic. It paid close to $3.7 billion for this venture, but afterwards, it emerged that the amount was too much. BRCM could have paid much less for this acquisition than what it ended up with in the long run, only if it had appeared to be not as desperate as it was. NetLogic’s services were necessary since it produces products which have been found to be quite good at improving the performance of any 3G or 4G device. This is one decision which has been playing in the minds of analysts and investors alike since it appears that BRCM made a very poor decision.

BRCM reported a 40 basis point decline in its gross margin. This is also not good news and has led to a lot of inquiries made by investors as to what it means for the future. I have come to learn that BRCM’s outlook is not as great as investors might have hoped. Depending on your goals for investing in this company’s stock, I would advice for a lot of research first before rushing to make any decision. You need to be patient and sober enough, and I would advice for a lot of caution before selling any stock you might have. Likewise, you need to wait before choosing to buy, and do so only when you are sure of its future.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.