The semiconductors industry can be pretty ruthless and filled with high stakes. It’s a sector consumed with rivals wanting nothing more than to put each other out of business with every new product launch. But Broadcom has always managed to stand out and remain a step ahead, which was the reason the company (rightfully) got the benefit of the doubt from the Street after posting soft fourth-quarter results.

Reasons to expect an outperformance
Nevertheless, the company’s been making up for it ever since. For instance, on Feb. 12, Broadcom announced the BCM21892, the company’s first LTE-compatible baseband chip that supports all 4G LTE bands — saying it was 35% smaller than current products, making it the industry’s smallest 4G LTE chip.

A couple of weeks later, the company announced the first Femtocell chip that integrates radio frequency and baseband modem. But that wasn’t all. In the weeks that followed, it’s been a succession of product releases and announcements. The benefit of the doubt aside, is the Street now discounting Broadcom’s true potential? This is a company that’s coming off a 14% year-over-year increase in revenue. Yet some investors considered that performance subpar.

Let’s keep things in perspective. Aside from Qualcomm , which grew chip revenue 34%, the sector’s overall performance was abysmal. So in light of Broadcom’s new products, which should help strengthen the company’s market position, it’s a safe bet that Broadcom should win market share in the coming quarters against Qualcomm and NVIDIA.

What’s more, even though Broadcom’s management played it conservative with guidance, the company’s strong position with Apple and Samsung, shouldn’t be discounted, either. Recent reports suggest that not only is Apple ramping up iPhone distribution in China, but Apple also plans to release a cheaper version. That’s not to mention the strong anticipation for the iPhone 5S. Meanwhile, although the Samsung Galaxy S4 didn’t exactly woo the Street, Broadcom should still benefit from any type of the demand the phone enjoys. Essentially, forget the smartphone war between Apple and Samsung: Broadcom wins either way.

Where’s the company heading?
Management has made it very clear where it wants to take the company. If the recent product announcements serve as an indication, the company also wants to be better diversified. When Broadcom held its analyst day last December, management revealed encouraging strategies related to near-field-communication, or NFC, and how the future of mobile payments can become a strong revenue stream for Broadcom. Here too, is an advantage with Apple.

There were also positive remarks about fifth-generation Wi-Fi. Management said new standards can generate 20% to 30% higher average selling prices. But there was also a significant focus on long-term-evolution, or LTE, technology. The company has held true to its promise and has taken on the LTE platform and has pioneered new designs such as the BCM21892.

It remains to be seen, however, how these new chips can affect Qualcomm, which has a sizable lead in mobile baseband technology. But given the traction that NVIDIA is starting to gain, Broadcom understands how important it is to …read more
Source: FULL ARTICLE at DailyFinance