Nyquist Capital » BRCM

Broadcom Enters FTTH Chipset Market

Andrew Schmitt — Thu, 03 Jul 2008 15:07:00 +0000

Broadcom is entering the PON chip market and has secured design wins with a major tier-1 equipment vendor. While this is something predicted here, the timetable was sooner than expected. This will have a substantial impact on FTTH component and equipment suppliers as well as the carrier currently conducting lab trials with the device.

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PMC-Sierra Q108

Andrew Schmitt — Tue, 29 Apr 2008 18:38:17 +0000

PMC-Sierra reported revenue at the high end of guidance but what caught investors attention was higher than expected revenue guidance for Q208. Of particular interest to readers should be PMC’s comments on FTTH in China and Japan, which we expand upon based on our in-depth knowledge of the area.

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The Future of the NPU Market - Part 1

Andrew Schmitt — Fri, 28 Mar 2008 19:40:54 +0000

Tthere are parts of the NPU market that will do well and others that will not. The edge of the network, with its burgeoning application growth, provides a fertile cradle for the NPU model while the core network is so harsh an environment that even the best managed companies face long odds of generating superior investment returns. Let’s examine why that is.

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DSL Market Consolidation Dynamics

Andrew Schmitt — Wed, 12 Sep 2007 20:27:14 +0000

The ongoing consolidation of DSL chip suppliers should create a positive structural effect on pricing and improve the overall health of the remaining players. Dave Burstein of DSL Prime fame points out that Broadcom (BRCM), Infineon (IFX), Conexant (CNXT), and Ikanos (IKAN) now account for 95% of DSL chipset market share. This is extremely positive.

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Cisco’s Fear of a Broadcom Planet

Andrew Schmitt — Mon, 20 Aug 2007 14:20:29 +0000

There are few franchises in the silicon business where one vendor so completely dominates the market. Everyone can name Intel’s CPU business as one. But can you name another?

Infineon/TI (IFX) in DSL is a contender. Conexant (CNXT) in PC modems (but little profit to show for it). Netlogic (NETL) in exotic CAM’s (but beholden to one sugar daddy customer - Cisco).

But nothing approaches the complete and total dominance of Broadcom’s (BRCM) grip on Ethernet switching silicon.

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The Madness of the Carrier Chipset Market

Andrew Schmitt — Mon, 23 Jul 2007 22:00:41 +0000

There is an excellent editorial today by Lee Goldberg that explores the lack of new R&D in SONET/SDH and PDH chip sets. While I don’t agree with the conclusion it is a worthy topic of exploration and he highlights something missed by the mainstream tech media.

The networking industry may be about to hit a hidden speed bump as the number of semiconductor companies actively involved with developing products to support SONET/SDH, PDH, and other TDM-based technologies can now be counted on one hand.

Lee thinks this is a big problem. This is not a problem at all. It is the only logical solution to the madness of the past 6 years.

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AMCC - Further Down the Spiral

Andrew Schmitt — Wed, 11 Jul 2007 19:53:13 +0000

AMCC (AMCC) held a conference call last Friday to review preliminary FQ108 results. The company indicated in April that FQ108 would be $60M down from $70M in the previous quarter (see “AMCC Kicks the Distribution Habit“). The final tally now puts it closer to $50M, a quarter over quarter decline of nearly 30%. This is worthy of detailed examination.

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Cornering the Commodity Market

Andrew Schmitt — Wed, 04 Apr 2007 16:56:37 +0000

The most under-reported but most significant announcement at OFC2007 was Finisar’s (FNSR) Fiber to the Home (FTTH) product. Most optical vendors are communicating their intent to NOT make a product for FTTH or Passive Optical Networking (PON) applications. When the worlds highest volume optical module supplier decides to go the opposite way, something noteworthy just happened.

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Centillium - Next on Someone’s Shopping List?

Andrew Schmitt — Thu, 22 Mar 2007 13:59:35 +0000

The excellent Linley Group discusses Cortina’s recent acquisition of Immenstar, (my coverage here) a maker of FTTH silicon. Cortina is rapidly making itself as a consolidator communication silicon companies and Linley speculates their next target might be a ’small VDSL vendor’. That vendor would be Centillium (CTLM), though I feel it is a better match for suitors other than Cortina.

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Vitesse Investment Thesis

Andrew Schmitt — Mon, 16 Oct 2006 18:43:46 +0000

I’ve been engaged in constant debate with readers and other investors about my position in Vitesse Semiconductor since disclosing it. Based on reader email, it was one of my more unpopular opinions. I thought it would be appropriate to share my investment thesis from early August with a wider audience.

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EZ-Chip and Raza Micro at Gilder Telecosm 2006

Andrew Schmitt — Tue, 10 Oct 2006 17:33:29 +0000

NPU companies consistently make the case the market is moving into their domain and that technology is their edge, right up to the point they go out of business.

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The End of Telecom As We Know It And I Feel Fine

Andrew Schmitt — Mon, 25 Sep 2006 19:18:01 +0000

Anyone know where the next ten-bagger investment is in the Telecom sector? Does anyone believe such an idea is even possible anymore?
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Quake - Another Failed AMCC Acquisition

Andrew Schmitt — Thu, 03 Aug 2006 14:00:01 +0000

The slow motion disaster movie that is Applied Micro Circuits Corporation (AMCC) is still in theaters even though investors stopped buying tickets long ago.

AMCC announced this morning an all cash deal to buy Quake Technologies for $69M net. AMCC has managed to spend nearly $1BB in cash on a number of acquisitions, none of which have provided a return better than simply sticking the dollars in the bank. We feel that Quake will be yet another failed acquisition.

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Intel’s Communication Group - Destiny Fulfilled

Andrew Schmitt — Fri, 28 Apr 2006 19:13:39 +0000

Intel corp (INTC) lands on Page A1 of the WSJ with a story covering their Analyst Day presentation in New York yesterday. The big news that is getting widespread coverage in many media outlets- including BusinessWeek - is that they are cutting $1BB (8%) in spending but without across the board job cuts.

The big problem is Intel’s work force grew 17% in the last year alone. So, the obvious path is to find businesses with high costs and low revenue, and spin those out to people who can manage them tighter. It sounds like this is exactly what Intel plans to do.
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Why Broadcom is a Scary Competitor

Andrew Schmitt — Mon, 24 Apr 2006 21:56:31 +0000

Broadcom (BRCM) is a scary company to compete with. They execute aggressively and have backup plans for when they don’t. They can bring to bear ridiculous amounts of resources, and justify the profligate fixed R&D expense on any one project by targeting high volume markets.

Here’s a question from Fridays Broadcom earnings call that highlighted yet another scary Broadcom trait.

Michael Masdea - Credit Suisse

…. As you converge more and more of certain pure play companies functionality into what youre doing, what kind of competitive responses are you seeing? Do you get worried when you start to take a company’s whole livelihood away that you’re going to see some irrational sort of competition?

Scott McGregor - CEO

Well thereâ€™s always a risk. What many companies do if they feel threatened is they cut their price to try and hang onto sockets. What our strategy is with our broad IP portfolio is we do integration of all the different technologies. So we end up eliminating sockets. Itâ€™s pretty hard to compete if the socket that youâ€™re in today has been eliminated by being integrated into a larger SOC.

I.e. if you are a niche player you should probably accept that buyout offer from Broadcom before they nuke your business.

Transcript Courtesy Seeking Alpha

PMC-Sierra Acquires Passave

Andrew Schmitt — Tue, 04 Apr 2006 21:09:07 +0000

PMC-Sierra Inc. (PMCS) announced at the close today that they are acquiring Passave, a company we have - written - about - extensively, for $300M in stock. In fact, I predicted PMC-Sierra would enter this business through acquisition, though I thought Teknovus would be the better path.
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