Broadcom Corporation (BRCM) Gets the Benefit of the Doubt — for Now

Leading up to Apple’s earnings report, there were concerns that the company had cut orders by as much as 50%. Such a move would have weakened Broadcom. And, given Broadcom’s “so-so” Q4 numbers, coupled with the soft guidance, there was some correlation there, especially in mobile/wireless. Naturally, the Street was bracing for a disastrous report and guidance. Instead, what Broadcom issued was “less bad” than expected, at least in aggregate.

The soft guidance notwithstanding, better performances are on the way. For instance, according to published reports, not only is Apple ramping up iPhone distribution in China, but the company plans to release a cheaper version. This coincides with anticipation for an iPhone 5S. Meanwhile, there’s Samsung’s Galaxy S IV, which is expected to be released next month. Broadcom should be a beneficiary of all of this pent-up demand.

Thanks for your patience
The quarter was no calamity. But management acknowledged there’s plenty of work to be done. This came after it announced a 10% dividend increase. Guidance wasn’t strong, either. But the tone of the explanation was reassuring. This is what separates strong companies from those considered mediocre. The stock is not cheap, but it’s hard not to like at this level.

The article Broadcom Gets the Benefit of the Doubt — for Now originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus owns shares of Apple. The Motley Fool recommends Apple, Cisco Systems, Riverbed Technology, and VMware. The Motley Fool owns shares of Apple, Qualcomm, Riverbed Technology, and VMware.

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