Singapore-based chipmaker Avago Technologies has announced it is getting US firm Broadcom in a multibillion-dollar deal aimed at making a global mobile chipmaking powerhouse. As a pioneer in SoC, Broadcom grew at a blistering pace throughout the dotcom boom years of the mid to late 1990’s. Lab technicians with stock possibilities became multimillionaires in the course of that heady period, as Broadcom fed a networking systems segment, itself growing in spectacular fashion, with increasingly sophisticated Ethernet chips to help wire the planet together and meet up on the net.
With distinctive sagacity, Broadcom developed chips that captured 80% of the frequent requirements for a legion of ASICs and left further customization in the hands of clients by delivering distributions of application stacks and tools. Right now, Broadcom is either dominant or ferociously competitive in nearly every segment of the customer and communications markets. Additional complications originate from Broadcom’s executive management, which is stained by a history of stock selection irregularities that resulted in losing court battles and severely affected earnings.
A Singapore-based business, Avago is not amongst the 16 firms chosen for the VF quarterly portfolio. In a classic ‘textbook’ method, Avago focused its efforts on developing technical expertise and market place segment excellence in cautiously chosen niches that developed quite steep barriers to entry for competitors. The stock is currently trading -1.88% under its SMA 50 and -22.24% beneath its SMA 200.
Avago continued growing its digital technologies and applications base in 2014, when it purchased PLX Technologies (known for its PCIe physical interface merchandise) for $300M. Viewed in a technical light, then, the Broadcom acquisition is each subtly perceptive and strategically brilliant. The acquisition of Broadcom has generating a leading and extremely-diversified communications semiconductor firm.
KKR, 1 of the original Avago investors in 2006, is much better known for its piratical LBO activity on Wall Street for the duration of the 1980’s. It would not surprise me in the least if KKR became a single of the members of the ‘banking consortium’ assisting to finance Avago’s acquisition of Broadcom. This latest move from Avago Technologies has formed a organization with revenues 4 times higher than in 2013.