San Diego IS just down the road, and there are
some complimentary products (though perhaps scattered
in too many markets). But a $2.5 billion acquisition
of a Cisco competitor? Or would we need to let
AMCC's managers interfere with the Henrys' leadership
(by way of merger)?
The fact that those "different" shorters is
actually the same person, or different people enlisted by
the same is transparent. I suppose if I had shorted
BRCM recently I'd resort to desperate measures
Even if BRCM is overvalued, the fact that it continues
to go up consistantly makes that argument somewhat
irrelevent. It just means you should watch it more closely.
Keep in mind BRCM isn't some hyped up internet IPO.
Ask Micheal Dell if 25% is sustainable and he'll
laugh in your face. Of course BRCM isn't Dell, but I
think the point is made just the same.
I know Dell's stock hasn't done well as of late,
but look at the performance since IPO. Broadband will
become a necessity just like Pentium computers. I
remember when I had a 486 running at a blazing 60MHZ. If I
still had it, it would take me a week just to log on!
I, too, think it is inappropriate to attack
someone who simply comes forward and expresses an opinion
about BRCM that includes it being too highly priced, or
prime for short selling. Admit it, it is. But a year
from now, we may not think so. With a run-up this
fast, it needs to have profit-taking unless we see
blockbuster news [which isn't expected this
The people we need to insult and drive off the board
are those who hog the bandwidth with rants,
repetition and bragging anonymously about their stock
picking prowess - with bogus links and half truths.
Try the same analysis with MSFT, and it doesn't
look great, but I own it and will continue to make
money with it.
What BRCM also offers is
explosive growth in revenues, gross profit and cash flow.
Net income is up 2 1/2 times last year. It has cash
exceeding all liabilities. Revenue was up 5 1/2 times from
97 to 98, and the market it dominates is having
explosive grown, increasing exponentially. While that
happens, its earnings could grow much faster than 100% per
year - just remember, acquisitions and related
expenses that give the company long range growth may
dilute earnings somewhat, but the company has the cash
flow to sustain it.
It IS overpriced. Will it
ever be substantially cheaper? I don't know. But, it
will be much more expensive as its sales and
You remark that DELL hit the skids when the
Have you looked at the price
today? Back to about the Jan 1st price and rising. I
tried to increase my position at 33 a couple of weeks
ago when it took its big dump, but missed it. Kept
thinking it would wallow around in the mid-30's longer,
with an occasional big dip before it moved back
It's hard to bet against the 900 lb. gorilla in any
growth industry: MSFT, INTC, CSCO, or BRCM that have a
jump on the competition, and know how to adapt. Good
products and good management will usually weather a bad
quarter or two, while they adjust to competition or
changing times. That's why they are more stable. Sometimes
you have a company like CPQ that starts trying to
change direction, making mistakes. It takes a lot longer
for them to adapt.
I intend to stick with
BRCM long term for those reasons. I just feel a lot
more comfortable when there are small incremental
increases in price, but that is the consequence of
volatility. This stock needs to rest for a while, until the
fundamentals change - then get ready for the next surge. I
can't time stock prices with any precision - never met
anyone who could
Congrats on your resolve to hold onto this baby
for so long. Sure, its been on fire since last
October, but it was tough sledding last summer (as you
know). I guess you're right about the personal attack
thing, but sometimes I just lose my temper with these
jerks. Anyway, I take great pleasure in knowing that
they will get theirs soon. Good luck.
Good analogy, rro. Both are blockbusters. CSCO
has proven it time and again and has evolved into the
classic, have-to-own-it growth stock. BRCM shows every
sign of heading in the same direction -- huge market
potential, market leadership, leading proprietary
technology, great acquisitions (e.g., Epigram), great work
ethic, and awesome management.
This stock has been "overvalued" for years but
always outperformed. Any thoughts from your quantitative
analysis on this stock?
After all, BRCM is also
expected to reach $1b in revenue faster than any
semiconductor company in history.