Broadcom Corp. always has had a fierce rivalry with industry kingpin Intel Corp. The two even traded lawsuits earlier in the decade.
On Wall Street these days, the rivalry isn’t so fierce. In the past three months, Irvine-based Broadcom’s shares have climbed nearly 40%. Intel has fallen more than 25%. The Philadelphia Semiconductor Index was flat during the same time period.
The stock divergence isn’t entirely surprising. Broadcom’s markets are more diverse and sexier than Intel’s. Broadcom’s chips power wireless phones, set-top boxes and the new video iPod. Intel, meanwhile, is in a fight of its own with Advanced Micro Devices Inc.
But while investors have put faith in Broadcom’s fortunes, the recent battles between the two chip companies have been more mixed.
Broadcom actually has lost ground to Intel in servers and portable computers, according to analysts.
A few years ago, Intel sold zero wireless fidelity chips while Broadcom was tops in the segment. But after Intel wrapped its own Wi-Fi chips into its Centrino chipset for portable computers, it took the No. 1 spot, according to Gemma Tedesco, an analyst with In-Stat in Phoenix, a division of Reed Elsevier Group of London.
Intel’s mammoth size gives it a big advantage over rivals in this space, she said.
“Intel was pretty late to that market,” Tedesco said. “Intel pretty much owns that space now.”
Broadcom still holds the top position in wireless home networking chips, Tedesco said.
For servers, Broadcom also has lost ground to Intel, said Jim McGregor, a principal analyst with In-Stat.
Nevertheless, Broadcom knocked off Intel in one other market: gigabit ethernet controllers, according to Dell’Oro Group Inc. of Redwood City. It made the move in 2004 and continues to hold the spot.
But all the back and forth doesn’t really figure big from an investment standpoint.
Rick Whittington of Caris & Co. in New York, goes as far as to advise selling Intel shares and buying more nimble chipmakers such as Broadcom.
“We recommend using Intel as a source of funds for other, much better competitively positioned chip and equipment stocks during a period we believe will prove fundamentally beneficial to the broad electronics industry,” he wrote in a recent report.
Whittington downgraded Intel from “average” to “below average” after Intel recently warned its revenue and margins would fall short of earlier estimates.
Intel’s problems: market share losses to Advanced Micro Devices and a buildup of unsold chips. Intel’s anticipated rebound could be delayed well into 2007.
“We believe until the dust settles … investors (are) best served owning the shares of other large cap chip companies,” Whittington wrote.
Artemis Acquired
A Newport Beach software company is being bought for about $27 million by Austin, Texas-based Trilogy Inc., which makes business software.
Artemis International Solutions Corp. makes software that helps companies develop products. The buyout takes Artemis private.
The company trades on the over-the-counter bulletin board exchange.
The software maker just didn’t have the size to handle the ups and downs of being publicly traded, said Robert Stefanovich, chief financial officer.
Companies need to have $100 million or more in annual revenue to make being public worth it, he said.
“If you’re a company below that threshold and you don’t have really a fast track to get above that, I question whether you should be publicly traded,” Stefanovich said.
Artemis also was hamstrung by its small float because of one large European shareholder, he said.
Between 2002 and 2004, the company racked up losses as revenues slid.
Last year, revenue fell nearly 10% to $47.4 million, but losses finally began to turn around, going from $9.7 million in 2004 to $4 million in 2005.
Earlier this month, Artemis reported a 10% decline in fourth-quarter sales to $13 million, versus a year earlier.
Artemis posted a loss of $555,000 in the period, compared to a loss of $1 million a year ago.
Stefanovich said the company underwent a major product transition that pushed the company into tough financial times.
The product transition involved adding more features to software that help companies manage product development or technology projects.
With the features, a company gets a better idea about how a widget will affect the overall company in areas such as sales, marketing or capital expenditures.
Artemis shareholders have to sign off on the sale. A vote is expected in May. Trilogy plans to fold Artemis into its Oakland-based unit, Versata Inc.
It isn’t clear if Artemis, which shifted its headquarters to Orange County from Colorado in 2002, will keep its leadership team here. Stefanovich said a decision is yet to be made. Less than 25 people work here, but the company has nearly 300 worldwide.
Decker Selling Shares
The architect of the recent Conexant Systems Inc. turnaround is unloading quite a few shares, but he had little choice.
Dwight Decker, chief executive of the Newport Beach-based chipmaker, recently exercised and sold 569,032 options that were set to expire on March 22. It netted him $417,382.
According to a regulatory filing, Decker made the move while the trading window was open so he wouldn’t lose the “in-the-money” value in these soon to expire options.
Decker landed the stock options in 1996 while he was an employee of Rockwell Semiconductor Inc., which eventually became Conexant.
