To many investors, Broadcom Corporation (NASDAQ:BRCM) is known simply as a chipmaker for Apple Inc. (NASDAQ:AAPL), but the company's CEO was on CNBC yesterday discussing its diverse structure. On the subject, Scott A. McGregor explained that "Broadcom makes connectivity chips in most smart phones," adding that "we have a few favorites, but we're mostly agnostic [...] we have pretty good share in both Apple and Samsung."
According to statistics from the company, "99.98% of Internet traffic passes through at least one Broadcom chip." Keeping this in mind that, McGregor also discussed the prospects of its 5G WiFi chip, which has been rumored to be included in Apple Inc. (NASDAQ:AAPL)'s products sometime in the near future. Here's what he had to say:
"We let our customers announce their own products [...] but we do see our 5G WiFi chips really taking off this year. We'll start to see those this quarter, and I think the ramp will accelerate through the year, and probably by the end of the year you'll see most of high-end smartphones carrying 5G WiFi. It really gives you better performance, faster, less battery usage, better range; it's pretty much good in all counts."
In addition to Apple Inc. (NASDAQ:AAPL), McGregor mentioned a "deepening of the relationship with" ARM Holdings plc (NASDAQ:ARMH), adding that "set-top box products" will be aided by the duo's partnership. Speaking specifically about the smart television boom, the CEO had a few interesting things to say.
McGregor declined to comment on speculation of an Apple Inc. (NASDAQ:AAPL) television (see Apple's 'iTV' Could Add $4.50 to EPS: Analyst), but he did share a few tidbits about the industry as a whole.
What were his main points?
When asked about his company's presence in the living room, McGregor said:
The CEO closed with the statement that Broadcom does "the plumbing of the Internet," adding that the company "has done a good job of working with most of the major players in the industry."
"At the CES show, there are absolutely beautiful 4K by 2K sets, or HVAC sets [...] but the interesting question is: how do you get the content on them? And so, we do that both with WiFi, and 5G WiFi has the bandwidth to do that. We also announced some set-top box products today that will enable the new ultra HD [...] sets that you're seeing now"
On the investment side of things, shares of Broadcom have gained close to 12% over the past 12 months, but the stock doesn't trade at particularly attractive valuation metrics, either from an earnings or cash flow standpoint. The sell-side expects EPS growth over the next five years to slow to 14% annually--down from the 20.6% average it has experienced since 2008.
Still, in the hedge fund industry, the stock has quite a bit of top-name interest, including long positions from David Tepper, Jim Simons and Paul Tudor Jones. Check out the entire industry's sentiment toward Broadcom here, and for more related coverage, continue reading below: