Tablet PCs are here to stay, and that bodes well for Irvine-based Broadcom Corp.
A recent study by IMS Research—an Austin, Texas-based consumer electronics market researcher that has been tracking the effects of Apple Inc.’s iPad— estimates that some 21 million tablet computers will be sold this year.
It expects that number to grow to 129 million in five years.
That’s good news for Broadcom, which supplies communications, radio and touchscreen chips that go into the iPad as well as other portable Apple devices.
FBR Capital Markets & Co. analyst Craig Berger said earlier this year that Broadcom is likely to see some $70 million in revenue generated from strong sales of Apple gadgets during the second half of the year.
“Tablet sales are expected to continue at an even stronger rate as Apple expands its retail reach and as others introduce new products,” said Anna Hunt, principal analyst at IMS.
Samsung Group, Research in Motion Ltd. and Dell Inc. are expected to unveil their own tablets next year, according to Hunt.
Apple is likely to remain the dominant player, she said.
“Apple’s early market leadership will be difficult to catch,” Hunt said. “The market will likely become quite crowded.”
IPads make up nearly three-fourths of the tablet market this year, according to IMS.
Tablet computers are generally defined as highly portable, wireless PCs that use a touchscreen instead of a keyboard.
Western Dig Stays Focused
The competitive landscape is shifting for Lake Forest-based Western Digital Corp., the biggest maker of disk drives by number of units sold.
The company’s top rival, Scotts Valley-based Seagate Technology LLC, is said to be in the midst of a deal that would take it private.
“We continue to believe that the stars are already aligned for Seagate’s private equity take out,” said Rich Kugele, an analyst at Needham & Co. in Boston.
Seagate, which had a recent market value of about $7 billion, behaved a bit out of the ordinary on its post-earnings conference call last month.
Seagate said it wouldn’t provide any financial guidance for the current quarter. Managers also declined to speak with investors or analysts after the call.
Analyst Kugele and others say that’s a sure sign of a pending deal.
If Seagate goes private, it might get a bit tougher for Wall Street to get a good read on the disk drive industry.
“As a private company, Seagate will not be under pressure to disclose much,” said Kaushik Roy, an analyst at Wedbush Securities Inc. in San Francisco.
The move also might put a damper on the cyclical price wars that plague the industry, in which the top players undercut each other at the expense of profits.
“If Seagate goes private, it will be under less scrutiny and less pressure to be super aggressive on pricing,” Roy said.
Western Digital Chief Executive John Coyne, for his part, doesn’t seem fazed.
“We’ve seen Seagate as a formidable and respected competitor,” he said in a call with analysts. “We have no reason to believe that that will change whether they are public or private.”
SRS Adds Advisers
Santa Ana’s SRS Labs Inc., a maker of chips and software for boosting sound in audio devices, is filling out its advisory board.
The company added Roger Dressler and Robert Maling to its board in recent months.
Dressler is a bit of a rock star in the industry.
He spent 25 years at Dolby Laboratories Inc. where he developed a variety of audio coding and processing technologies for speakers in homes, cars and computers.
Prior to Dolby, Dressler was an engineer at an audio unit of Motorola Inc.
He holds six patents.
Maling is an auto industry veteran, with some two decades at Toyota Motor Sales USA Inc.
Most recently, he was vice president of sales and dealer development at Toyota’s Lexus division. He retired from Toyota in 2002 but still does consulting work for other automakers.
SimLab Sells
Rancho Santa Margarita-based SimLab Corp. which makes modeling software for automakers, was acquired by Troy, Mich.-based Altair Engineering Inc.
Financial terms of the deal weren’t disclosed because both companies are private.
Altair is set to fold in SimLab’s some 30 employees into its Irvine office, according to Mike Kidder, Altair’s vice president of marketing.
SimLab’s software draws up mathematical models of auto parts. Its specialty is designing powertrains for vehicles.
