Denver, CO – (Stocksntrade) – 05/14/2014 – Broadcom Corporation (NASDAQ:BRCM)’s first quarter financial results did not paint the clear picture of the company’s exceptional performance in the networking business that continue to act as the driving force going forward. Despite broadband service business doing exceptionally well in the industry, the company continues to pay a heavy price on the ongoing tilting in the mobile windmills.
Broadband Segment up by 4%
The Calif based company reported first quarter revenues that were 1% down on a year over year basis and 4% down sequentially. Mobile services segment continues to be a headwind in the company’s operations, seen by a 15% plummeting in the quarter, consequently weighing into the broadband services that were up by 4%. Broadcom is not preparing to hang up its boots on mobile ambitions despite receiving a huge beating in the quarter.
Abandoning the segment will be a huge let down considering the company built itself into becoming a leading supplier of connectivity chips, as well as its multibillion processor and combo chips. The biggest challenge comes from increased competition from Qualcomm that is one of the leading developer and supplier of mobile chips. The acquisition of Japan’s Renesas has stagnated in terms of return despite being expected to spearhead growth in the year.
No exit Plans on Mobile
Broadcom Corporation (NASDAQ:BRCM) is also not getting the much needed credit for its strong position in Ethernet Switching. This space has also been engulfed with immense competition From Cavium Inc., which is soon merging with LSI Corp. it awaits to be seen how the company performs on its 4G LTE efforts in the second half of the year. This is expected to have major implications on whether the company will continue to hold on to its mobile segment.
Exiting the mobile segment would be a negative move for Broadcom Corporation (NASDAQ:BRCM) in terms of earnings, despite the broadband segment continuing to show greater growth potential.
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