Monday, September 25, 2006

Calls of Note Part 7

- BMO Capital Markets are raising their 4Q estimates on Broadcom (NASDAQ:BRCM) to a 5% sequential increase from an earlier 2% sequential increase, which puts them in line with Street estimates.

Why the change? According to the firm, they did not believe management when it gave the original guidance, and their own checks at the time had indicated that business stayed very weak for 3Q. However, recently, per our industry checks, firm's sense is that Broadcom's own visibility has improved going into 4Q: specifically, the company's 12-week rolling forecast has stabilized. The areas helping 4Q are 1) ramp of the Wii game console platform, 2) 802.11n in new PC customers, such as Hewlett Packard, and Apple, 3) increasing handset shipments in 3G, potentially besides Samsung, 4) ramps at Bluetooth, and FM tuner in new customers, and 5) recovery in the DSL business, a little faster than anticipated recently, owing to ramp in sockets won against competitors. They believe these areas should offset weakness in areas such as enterprise that theybelieve remain soft.

They expect BRCM to OUTPERFORM the market.

Notablecalls: I've been hearing good things about BRCM over the past weeks. Would not be surprised to see some upside in the shares.

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