That cellphone business is killer

Craig Matsumoto, Editor-in-Chief, Light Reading

October 24, 2007

1 Min Read
Broadcom Drops

NOON -- ATLANTA -- I ought to be blogging TelcoTV here, but this caught my eye: a downgrade to Sell for Broadcom Corp. (Nasdaq: BRCM), following itsthird-quarter earnings yesterday.

That's courtesy of analyst Shaw Wu of American Technology Research this morning. His main concern is the cost of Broadcom's mobile-phone initiative. He writes:

"BRCM is a relatively new player in the space and we underestimated (we believe BRCM did as well) the costs associated with entering this highly competitive business."



Broadcom might have to "price aggressively to beat out incumbents," he adds. On top of that, Wu doesn't see any serious pickup in Broadcom's core markets such as networking and Bluetooth:

"The combination of lower revenue and higher expenses is not a pretty sight. As a result, we are reducing our estimates significantly. For 2008, we are now modeling $4.26 billion in revenue and $1.20 in EPS (down from $4.3 billion and $1.60)."

Wu is not alone; Broadcom stock is down 17 percent this morning.

Now it's off to the TelcoTV exhibit floor, to meet with Packet Vision Ltd. There's a story to be had in the ad-insertion work they're doing.

— Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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