Avago Looks Like A Relative Bargain

It looks like semiconductor slowdown worries are mostly in the past. Looking across the chip space, particularly the analog sector, most of the major players are either at or very near 52-week highs. While Avago (Nasdaq:AVGO) is likewise near its high for the year, investors may nevertheless want to look a little further and see whether this name might offer a relative bargain in this sector. 

An Okay Quarter To Close The Year
Avago's fiscal fourth quarter earnings showed a familiar theme in the chip sector - good year-over-year growth, okay sequential growth and a warning of sequential contraction early in 2011. More specifically, the company reported that total revenue grew 4% on a sequential basis (up 34% from last year), as sales into the wired segment grew 15% from the Q3 while consumer and computing sales dropped 22%.

Profitability fared better, though. Gross margin improved whether an investor looks at the GAAP, non-GAAP or adjusted non-GAAP numbers. The GAAP numbers show a 50 basis point sequential improvement and a substantially better jump from the year-ago level. Avago also reported more positive leverage through the operating and net income lines.

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