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Broadcom: 4Q05 profit $194.8 million, current market cap $23.59 billion
posted by Sharikou, Ph. D. @ 3/17/2006 09:29:00 PM
7 Comments:
He tries to say that broadcom is too expensive and should therefore be shorted...
Or AMD is too cheap and should be longed.
or both
My point is simple: a company is valued by multiplying its earnings by a PE ratio. Clearly, Broadcom has a much higher PE than AMD based on 4Q05 numbers. However, currently a lot of retarded analysts prefer Broadcom, because AMD had some bad quarters before because of Spansion losses. If AMD restated its earnings by exclusing Spansion results, then AMD trailing PE would be around 30. So going back or forward, AMD is in a much better situation than Broadcom the wall street darling.
Except a few brighter ones or smarter crooks, most of the WS analysts are a bunch of retards with IQ of no higher than a Neantherdal and education no higher than a Joe Blow in the streets, yet they act as authoritative figures and spew their saliva here and there. The human society has the history of following authoritative figures, so these retards take the advantage of weaker minded people and control their actions in the financial markets. We all see this because if you look deeper into their "analysis", you see no logic or reasoning, you see only a bunch of hand waving semi-retarded stuff.
As someone pointed out, the internet will destroy financial analysis as a trade, one by one, they will lose their credibility and their analysis will carry zero weight.
Based on what your saying There is a killing to made on AMD shares if one gets in now!!..
Come Get Some!
The traditional way of valuing a company is the PE ratio, but a more modern and better way is the PEG ratio, or Price to Earnings to Growth. This is the PE ratio divided by the expected future growth rate of earnings. The rationale behind this is that a company whose earnings are growing faster deserves a higher valuation. A PEG of 1.0 means a company is fairly valued, below 1.0 means it's a good deal, and above 1.0 means it's expensive. The math behind this can be found in any text book on Corporate Finance.
Looking at Yahoo Finance, AMD's PEG is 1.64, Broadcom's is 1.26, so Broadcom is still a better deal.
Growth estimates are subjective. AMD's growth potential is cleary underestimated. Wall Street are expecting AMD to take 25% market in 2 years. I project AMD to exit 2006 with 40% market. AMD grew 35% q/q in 4Q05, far exceeding BRCM. We will see how much AMD grew in 1Q06 soon. If Intel makes any mistake with its so called NGMA, expect INTEL to die in 2 years.
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