New Chip Could Land Broadcom (BRCM) a Whale - Analyst

February 12, 2013 5:11 PM EST
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Price: $54.67 --0%

Rating Summary:
    22 Buy, 32 Hold, 1 Sell

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    Up: 19 | Down: 19 | New: 13
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This morning, Broadcom (NASDAQ: BRCM) announced a new 4G LTE chip, the BCM21892, which is a 28nm 4G LTE modem with integrated radio and cellular baseband that supports all 3GPP standards technologies including 4G LTE-Advanced with carrier aggregation, HSPA+, TD-SCDMA and EDGE/GSM. This according, RBC Capital analyst Doug Freedman, could land the company the whale, also known as Apple (Nasdaq: AAPL).

The company described the new chip as follows:
"Compliant with all 3GPP specifications, the BCM21892 combines a full-featured cellular baseband with a world-band radio in a footprint that is approximately 35 percent smaller than current industry solutions. Advanced power management techniques save up to 25 percent of the power typically consumed during data transmissions to the network. The new modem also supports LTE Category 4 speeds of 150Mbps[1], operates in any 3GPP network and performs seamless hand-offs between the various 4G LTE, 3G and 2G interface technologies."

"In our view, this chip could be the baseband chip that gets them into Apple," Freedman said. "We are encouraged that BRCM is entering the LTE supplier group at LTE-Advanced (carrier aggregation) and not just LTE. We do feel that Apple is currently one of the customers sampling. While it’s too early to determine if BRCM grabs the Apple win, we feel the solution is currently generating strong interest from the OEM, being a very viable product for their road-map (TD-SCDMA compatible)."

Shareholders should look at the news in a incremental positive, the analyst said. "Today's news is a clear incremental positive given we believe Apple may welcome the solution," he said. "Upside in the segment is expected to be driven by on-going connectivity share gains and transition towards higher ASP platforms particularly with LTE ahead. BRCM is also benefiting from rising China-based customers, partially helped by its turn-key reference platform."

The analyst maintained an Outperform rating and $45 price target.

For an analyst ratings summary and ratings history on Broadcom click here. For more ratings news on Broadcom click here.

Shares of Broadcom closed at $33.40 yesterday.

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