More Good News for Broadcom Corporation (BRCM)

I have to admit that being the “lone bull” on Broadcom Corporation (NASDAQ:BRCM) has been a somewhat difficult road since its less-than-stellar showing at its July earnings call. However, while the July earnings call was less than stellar, the situation has substantially improved since then. The company made a strategic acquisition to accelerate LTE revenues into early 2014, and despite taking a writedown on its NetLogic acquisition, seems to be gaining material traction in the network processing unit (“NPU”) space. I also believe that Apple Inc. (NASDAQ:AAPL)‘s iPhone 5C launch, as well as the launch of Intel (NASDAQ:INTC)’s “Bay Trail” tablet platform, will prove to be tailwinds for the company’s connectivity business.

Broadcom displaces EZChip at ZTE
While mobile chips tend to get the spotlight, it’s important to note the good quarter of Broadcom Corporation (NASDAQ:BRCM)’s revenue base actually comes from network infrastructure chips. In order to expand its presence in this space, the company acquired NetLogic Microsystems, a leading developer of multi-core embedded processors as well as knowledge-based processors (these are processors designed to process packets in computer networks).

While the company recently took a $461 million writedown on the acquisition, the company has been adamant that the long-term strategic value of the acquisition remains intact. Indeed, with the recent note published by Maxim’s Ashok Kumar stating that Broadcom Corporation (NASDAQ:BRCM) just won a major socket at telecom equipment vendor ZTE Corporation, displacing EZchip Semiconductor Ltd. (NASDAQ:EZCH), it seems that Broadcom’s strategy is beginning to pay off.

Of course, while this win is optically significant, it’s helpful for investors to keep in mind that the value of this particular socket is on the order of a couple of million per quarter. It does bode well, however, for share gains going forward, and ultimately sentiment around Broadcom Corporation (NASDAQ:BRCM)’s network semiconductor business.

Broadcom likely in the iPhone 5C, 5S
While Apple Inc. (NASDAQ:AAPL) investors were disappointed that the “cheap” iPhone 5C is still very much a high end, only a slightly cheaper device, the good news for Broadcom Corporation (NASDAQ:BRCM) shareholders is that such a high-end device is likely using a premium Wi-Fi chip from Broadcom, as previous iPhone releases have. It’s disappointing that the 5S/5C didn’t come packed with NFC (which could have been an increased the dollar content opportunity for Broadcom), but the fears that Broadcom would lose this socket have largely subsided – although we will know in the affirmative once iFixit does a tear-down of the device.

Intel ‘Bay Trail’ reference design sports Broadcom GPS and Wi-Fi – More tablet momentum up ahead?
At the Intel Corporation (NASDAQ:INTC) Developer Forum, I had a chance to play with the form factor reference design for Intel’s upcoming “Bay Trail” system-on-a-chip. While it is too early to tell how much traction these devices will gain in the market, a quick peek at the device manager within Windows told me that the design came packed with a Broadcom Corporation (NASDAQ:BRCM) Wi-Fi and GPS chip.