Big Caps That Went Nowhere In 2006: Broadcom (BRCM)

It must be tough to fight though a whole year of trading and found yourself right where you started. Well, Broadcom did just that. It entered the year just below $32 and trades at a little over $33 now. This is a stock that trades an average of over 17 million shares a day.

Broadcom has been in patent litigation with Qualcomm for some time. As piece of news moves the stock up or down. Recently, the International Trade Commission took Broadcom’s side and the stock took a tick North.

The stock has traded in a fairly wide range in the last 52 weeks, from $21.98 to $50.

The company makes an array of chips for set-top boxes, wireless devices, enterprise network systems, and DSL modems. Good business with broadband booming. On the other hand, the company has very high stock options costs. It also competes against Texas Instruments and Qualcomm, a couple of hard nuts.

After huge losses from 2000 to 2003, the company is finally showing a profit.

Problems with options back-dating have certainly kept the stock down. Nasdaq recently sent the company another notification that it is risking delisting. If that were to come to pass, a lot of institutions would flee the shares.

Until the accounting and options issues are cleaned up, the stock may continue to go nowhere fast.

Douglas A. McIntyre can be reached at [email protected]. He does not own shares in companies that he writes about.

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