I was pleased to see that management took the initiative to control their spending. I'm starting to feel better about the stock's potential for 2008.
At some point this year, we should start to price in cellular baseband share gains expected in 2009. My own made-up rule is that the markets look ahead about 6 months. No empirical evidence to back that up. Just making it up. But if I'm close, then sometime in the late summer, investors should begin to price in the potential share gains in 2009.
One thing I've never fully understood about BRCM's forecast of 10% market share of basebands is this: do they mean they will exit 2009 with 10% market share for the entire year, or do they mean that by 4th quarter of 2009, they will have 10% share exiting the year (if it had been annualized) and so really it's 2010 where they will have at least 1 out of every 10 baseband chips?
Obviously the latter forecast isn't quite as aggressive as the former. No analyst has ever asked them to clarify this. And I don't know how to properly interpret their forecast.
But either way, we're talking about a huge new market for BRCM. I like the idea that we're starting with almost 0% market share in an industry that should be shipping over 1.3 billion units at that time.
That's a lot of widgets. At least 130 million of them. At $9 to $10 average selling price = billion+ in new revenue. Throw in bluetooth, PMU, wi-fi, and GPS across many of those phones and your potential revenue only goes up from there.
I think the Shorts best days are behind them. They always over-play their hand. (Whereas I'm just lazy and always miss the tops.) If the macro-economy holds, we hopefully have seen our lows for the year.
I always look forward to reading your posts. Good luck and I'll see you around.