BRCM: Jefferies Sees Share Loss to CAVM, FBR Sees Share Gains Vs. QCOM
By Tiernan Ray
There are some mixed messages regarding shares of semiconductor maker Broadcom (BRCM) this morning.
On the one hand, Jefferies & Co.’s Sundeep Bajikar, who has a Buy rating on shares of competitor Cavium (CAVM), this morning writes that Cavium is stealing share from Broadcom in routing and switching equipment as the latter is preoccupied integrating Netlogic, the acquisition of which it completed on February 17th:
Our checks at Cavium’s customers and competitors indicate the company is taking share in multicore processor from Broadcom (Netlogic), primarily in routing/switching applications within Enterprise/Service Provider markets. We believe Broadcom is losing share in part due to challenges with integration of its Netlogic acquisition.
On the other hand, FBR Capital’s Craig Berger this morning reiterates an Outperform rating on shares of Broadcom, writes that investors have been missing the fact that Broadcom is taking share in baseband chip shipments from Qualcomm (QCOM) at Samsung Electronics (005930KS) as Samsung tries to broaden its smartphone portfolio by using less expensive chips:
That Broadcom has been winning some baseband share at Samsung this year is somewhat known among the investor base. However, we believe the magnitude of these share gains is fairly meaningful, and likely underestimated by the Street. Samsung seems to be pushing for massive smartphone shipment growth in 2012, forcing smartphones into as many different price points as possible, and pressuring handset BOM costs in the process. By using Broadcom basebands and not Qualcomm basebands in many more phones, Samsung can save meaningful costs of roughly $8-$10 per handset, per our estimates. Our independent handset supply chain checks suggest that Broadcom could supply 30%-40% of Samsung’s smartphone basebands in 2012 (60M-80M units out of Samsung’s 195M unit smartphone target), plus some of Samsung’s non-smartphone shipments (some portion of another 150M-170M handsets). We think this is meaningful growth this year versus last, and should help to stem the impacts from Broadcom’s falling 2G baseband shipments to Nokia and Samsung, which has been a headwind.
Broadcom share are down 2 cents at $36.69, while Cavium shares this morning are down 6 cents at $28.87, and Qualcomm stock is off 56 cents, or 0.8%, at $66.11.
Copyright 2011 Dow Jones & Company, |
