Broadcom Guidance tip toes past cash and growing debt not to mention dividend issues $BRCM


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Broadcom (Nasdaq:BRCM) issued improved guidance and wants everyone to be happy. Something about its going to be a better world. The guidance is overly focused on EPS and is starting to lose sight of fundamentals. They claim improvements in cash position and then throw in they have a planned debt offering which means operations will not be spinning off the cash.

So as Broadcom is preparing to talk to bond/debt investors you make your earnings look as good as possible. Hmm. No word on why they need to borrow. I’m sure the lenders will ask. It’s a standard question in debt underwriting.

The dividend seems very anemic at well under 1.5% yield. The Broadcom name is not well-known to income oriented investors. With the latest proposed offering it looks like Broadcom debt will climb over the $1 Billion mark. Market cap is only around $15 Billion. $1 Billion of debt is rapidly becoming a new factor. Investors are not used to seeing such huge debt numbers. Interest payments and the eventual repayment are all becoming increasingly important for a high-tech company in a cut throat hyper competitive market. How you going to do that?

The stock is languishing around its 52 week low. What to do? Share buy back at the low-end. Expensive even desperate.

So the guidance thing has left more questions than answers.

George Gutowski writes from a caveat emptor perspective.

Insider Trading Equals Industrial Espionage

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Federal authorities arrested Don Chu, an executive in the employ of Primary Global Research, an expert networking firm, on insider trading charges. They picked him up on Wednesday very early in the morning because he was booked to leave for Taiwan on Sunday.

Primary Global research seems to be a clearing house for so-called expert opinions. So far they seem to be operating domestically. The line between expert opinion and industrial espionage seems very blurred. While you have to applaud current enforcement moves by the Federal Government, will this so-called expert opinion business just move off shore where the FBI has no jurisdiction.

Disclosure: George Gutowski writes from a caveat emptor perspective. He holds no position in stocks mentioned in this post.