Broadcom Update

BRCM : NASDAQ : US$27.14
BUY 
Target: US$32.00

COMPANY DESCRIPTION:
Broadcom is a global leader in semiconductor products for wired and wireless communications. Broadcom operates in three key business groups: Mobile & Wireless, Infrastructure & Networking, and Broadband Communications.
All amounts in US$

Following Results Update:

Investment recommendation
We remain at a BUY following upside results and soft outlook, based on our view for wireless product cycles and share gain
combined with infrastructure recovery. We continue to see 5G wifi as a positive trend driving mobile and wireless in 2014, while management reiterated its expectation for entry into LTE in early 2014. Meanwhile, infrastructure delivered a strong quarter and continues to deliver strong Y/Y growth in Q4.
Investment highlights
 BRCM reported Q3/13 (Sep) after the close. Revenues and EPS were $2.15 billion (+3% Q/Q) and $0.76. This compared to consensus estimates of $2.13B/$0.69 and our estimates of
$2.13B/$0.68.
 The company guided DecQ revenue down 8% Q/Q at the midpoint ($1.975 billion) and implied EPS is $0.51. This was below the consensus view of $2.13B/$0.59 and our estimate of $2.15B/$0.60.
Management expects sequential decline in Mobile & Wireless and Broadband coupled with slight decline in Infrastructure &
Networking.
Valuation
BRCM’s price target of $32 (was $35) is 12x our C2014 EPS estimate of $2.64 plus net cash of $1.68/share.

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