Broadcom (NASDAQ:BRCM)
has had to learn some hard lessons about growth for growth's sake.
Chasing revenue growth for its own sake led the company to two sizable
ill-fated (and overpriced) acquisitions, not to mention the fruitless
investment of substantial monetary resources into the uncompetitive
broadband business.
Chastened by its failures, Broadcom management
has retrenched around its established strengths and reprioritized
profitable growth. Lost, or at least obscured, in the fuss over baseband
and the lingering concerns about wireless connectivity is a very strong
business in switching and broadband, not to mention upside from
IoT-oriented connectivity products. Broadcom isn't obviously cheap from a
FCF perspective, but if Broadcom can deliver the margin improvements
its management projects and if the company can stick to a Texas Instruments-like (NASDAQ:TXN) transformation, there could be long-term upside beyond $50.
Read more here:
Better Priorities Leading To Better Outcomes For Broadcom
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