Broadcom Corporation vs.

Texas
Instruments, Inc.

Created by Bhavin Gandhi

Bhavin.Gandhi@igt.com
May 31st, 2009

Topics to be covered
Overview of Broadcom Corporation
Overview of Texas Instruments, Inc.
Business comparison
Financial Statements comparison
Financial Ratio comparison
Conclusion
Questions

Bhavin Gandhi: Bhavin.Gandhi@igt.com

Broadcom Corporation

Address:

URL:
Founded:
Ticker:
Employees:

5300 California Avenue,

Irvine, CA 92617
http://www.broadcom.com
August, 1991
BRCM
7,402

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Broadcoms Products Applications

Broadband Communications
Enterprise Networking
Mobile & Wireless

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Texas Instruments, Inc. (TI)

Address:

URL:
Founded:
Ticker:
Employees:

12500 Texas Instruments

Blvd, Dallas, TX 75266
www.ti.com
1972
TXN
29,537

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TIs Products Applications

Communications
Industrial
Consumer Electronics
Computing
Automotive
Education

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Revenue Distribution by Products

Broadcom Corp - 2008
Broadband Communication

Enterprise Networking

Mobile and Wireless

Texas Instruments - 2008

Communications

Computing

Industrial

Consumer

Automotive

Education

6%
36%

37%

48%

10%

27%

4%

10%

22%

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Revenue Distribution by Regions

Broadcom Corp - 2008
Asia

Europe

USA

Others

Texas Instruments - 2008

Asia

Europe

1%

USA

Japan

Others

3%
10%

30%
13%
60%

10%

15%

59%

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Broadcoms Common-sized Balance Sheet

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Broadcoms Common-sized Income Statement

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10

Texas Instruments Common-sized Balance Sheet

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Texas Instruments Common-sized Income Statement

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Broadcom Corporation

Texas Instruments, Inc.

6000

20000

5000
4000

15000

3000
2000

10000

1000
0

5000
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

-1000
-2000

0
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

-3000
-4000

-5000
Sales

Assets

Net Income

Sales

Assets

Net Income

Revenue, Income and Assets

Comparison
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Broadcom Corporation

Texas Instruments, Inc.

5000

16000

4500

14000

4000
12000
3500
10000

3000
2500

8000

2000

6000

1500
4000
1000
2000

500
0

0
2008

2007

2006

Revenue

2005
R&D

2004

2008

2007
Revenue

2006

2005

2004

R&D

Revenue and R&D spending

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Liquidity Ratios
Quick ratio comparison

Current ratio comparison

6.00

5.00
4.50

5.00

4.00
3.50

4.00
Current Ratio

Quick Ratio

3.00
2.50
2.00

3.00

2.00

1.50
1.00

1.00

0.50
0.00

2008

2007

2006

2005

2004

Broadcom

3.17

3.69

4.51

3.40

2.78

Texas Instruments

2.25

2.30

2.64

2.94

4.08

0.00

2008

2007

2006

2005

2004

Broadcom

3.84

4.18

4.94

3.90

3.17

Texas Instruments

3.78

3.42

3.78

3.96

5.33

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Working Capital Management Ratios

Days sales outstanding
(DSO) comparison

Days sales of inventory

(DSI) comparison
90.00

60.00

80.00
50.00
70.00
60.00
50.00

DSI

DSO

40.00

30.00

40.00

20.00

30.00
20.00

10.00
10.00
0.00

0.00

2008

2007

2006

2005

2004

29.17

35.66

38.10

42.00

31.19

Broadcom

Texas Instruments 26.66

45.96

45.42

48.77

48.82

Broadcom

2008

2007

2006

2005

2004

60.38

46.08

41.22

56.02

39.13

Texas Instruments 80.22

80.04

74.97

68.45

67.84

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Measures of Profitability
Return on assets
comparison

Return on equity
comparison

35.00

40.00

30.00

35.00
30.00
25.00

Percentage

Percentage

25.00
20.00
15.00

20.00
15.00

10.00

10.00

5.00
0.00

5.00
0.00

2008

2007

2006

2005

2004

4.89

4.41

7.77

9.78

6.00

Broadcom

Texas Instruments 16.10

20.98

30.76

15.43

10.76

Broadcom

2008

2007

2006

2005

2004

5.95

5.29

9.04

11.69

7.33

Texas Instruments 20.59

26.64

37.72

19.47

13.42

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Measures of Profitability (contd..)

Return on sales comparison
35.00

30.00

ROS in percentage

25.00

20.00

15.00

10.00

5.00

0.00

2008

2007

2006

2005

2004

Broadcom

4.61

5.65

10.33

13.74

7.21

Texas Instruments

15.36

19.20

30.06

18.84

15.17

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Financial Leverage Ratios

Debt to equity ratio comparison
0.30

0.25

D/E - ratio

0.20

0.15

0.10

0.05

0.00

2008

2007

2006

2005

2004

Broadcom

0.22

0.20

0.16

0.19

0.22

Texas Instruments

0.28

0.27

0.23

0.26

0.25

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Market Value Ratios

Earnings per share (EPS) comparison
3
2
1
0
Amount in dollars

-1
-2
-3
-4
-5
-6
-7
-8

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Broadcom

0.21

-2.08

-7.2

-5.56

-2.95

0.33

0.66

0.64

0.37

0.41

Texas Instruments

0.83

1.73

-0.17

-0.27

0.6

0.9

1.3

1.66

1.83

1.45

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Conclusion
Inflation in semiconductor industry
Increasing cost of manufacturing
Growing importance of Consumer
market
Texas Instruments proves to be the
winner

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Questions??
Contact Details:
Bhavin Gandhi
Bhavin.Gandhi@igt.com