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Tuesday, April 22, 2008

Broadcom (BRCM) 1Q:2008 Results

Broadcom came in at the higher end of their guidance with profitability far better than estimates, likely on higher royalty revenues than models carry. I get non-gaap gross margins of 53.9% which is better than consensus of 52.6% but doesn't seem to compensate for the royalties. Expenses look better than expected, though, and non-gaap operating income comes in as much as 50mm better than estimates. Even if I back out the 35mm of royalty income (pure margin) they reported, the operating income is better... and some royalty income had to be expected. They're guiding to growth in all of their business lines due to good customer visibility. Though this stock has had a pretty good move off the bottom, it never belonged at $18 in the first place. I think it still has room to move higher assuming guidance is okay... and it should be.

Stock has some room to $28 just to get to its 200 day moving average. We're probably going to trend to that level.

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