The latest inspection under the hood of Apple Inc.’s iPhone 5s and 5c should quell mounting concerns on Wall Street that Broadcom Corp. is losing business from the Cupertino-based consumer electronics maker.
Tear-down specialists and gadget repairmen at San Luis Obispo-based ifixit.com revealed the smartphone models released Sept. 20 again contain Broadcom’s FM tuner, Wi-Fi, Bluetooth and GPS connectivity chip, as well as a touch-screen controller chip.
Shares of the Irvine-based company took a beating in July, falling more than 16% in a two-day period after the company reported mixed financial results for the second quarter and gave a disappointing sales outlook for the recently ended quarter as demand for its chips remained flat, prompting analyst downgrades from seven investment banks.
Pacific Crest’s Michael McConnell was among them, warning investors that Broadcom could lose sales of its key Wi-Fi combo chips to Apple. The downgrades came as rumors swirled that Apple was the unnamed buyer that paid $315 million to Broadcom competitor Texas Instruments for its wireless connectivity technology.
No word yet on the name of the buyer.
Shares—despite the latest Apple win for Broadcom, which FBR & Co.’s Christopher Rolland called “the biggest beneficiary” among chipmakers—have dipped nearly an additional 2% to a market value of about $15.51 billion.
“We are of the opinion that no change in content is good for Broadcom,” Rolland, an analyst in the New York office of the Arlington, Va.-based company, wrote in a recent note to investors. “Our conversations with those in the design community give us confidence that Broadcom’s connectivity will remain in Apple products until at least the iPhone 6, 6S, or beyond.”
Apple was Broadcom’s second-largest customer in 2012, accounting for 14.6%, or nearly $1.2 billion, of the company’s record $8.01 billion in sales last year.
Apple sold a record 9 million iPhone 5s and 5c models in the first weekend of sales, beating Wall Street expectations of about 6 million.
The company sold about 5 million iPhone 5 models during last year’s opening weekend but didn’t have the benefit of a simultaneous launch in China. The cheaper iPhone 5c, which costs $99 with a contract, is geared for the China market and features less costly components, including its plastic case.
Activision/Vivendi Deal in Balance
The fate of Blizzard Entertainment Inc.’s parent to regain independence from French conglomerate Vivendi SA could be decided this week.
Santa Monica-based Activision Blizzard Inc. will make its argument to Delaware’s Supreme Court in a bid to overturn a lower court’s ruling that halted the video game maker’s pending $8.2 billion deal with the Paris-based media company.
A company investor sued to try to stop the deal, arguing Activision Blizzard didn’t put the proposal to a stockholder vote.
Activision, under the proposed deal, would acquire 429 million shares from Vivendi for roughly $5.8 billion, while an investment group led by Activision Chief Executive Bobby Kotick and Co-Chairman Brian Kelly would buy about 172 million Activision shares from Vivendi for approximately $2.3 billion.
Vivendi is set to keep about a 12% stake in Activision Blizzard, or 83 million shares, if the proposed buyout succeeds.
