broadcom vs. texas instruments ppt
DESCRIPTION
The purpose of this paper is to apply the framework of multi-criteria analysis on two semiconductor giants, Broadcom Corporation and Texas Instruments, Inc. An effective approach based on various financial ratios is developed to rank these companies in terms of their overall performance.TRANSCRIPT
Broadcom Corporation vs. Texas Instruments, Inc.
Created by Bhavin Gandhi
May 31st, 2009
Topics to be covered
Overview of Broadcom Corporation Overview of Texas Instruments, Inc. Business comparison Financial Statement’s comparison Financial Ratio comparison Conclusion Questions
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Broadcom Corporation
Address: 5300 California Avenue, Irvine, CA 92617
URL: http://www.broadcom.com Founded: August, 1991 Ticker: BRCM Employees: 7,402
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Broadcom’s Products Applications
Broadband Communications Enterprise Networking Mobile & Wireless
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Texas Instruments, Inc. (TI)
Address: 12500 Texas Instruments Blvd, Dallas, TX 75266
URL: www.ti.com Founded: 1972 Ticker: TXN Employees: 29,537
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TI’s Products Applications
Communications Industrial Consumer Electronics Computing Automotive Education
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Revenue Distribution by Products
37%
27%
36%
Broadcom Corp - 2008Broadband Communication Enterprise Networking
Mobile and Wireless
48%
22%
10%
10%6% 4%
Texas Instruments - 2008Communications Computing Industrial
Consumer Automotive Education
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Revenue Distribution by Regions
30%
10%60%
1%
Broadcom Corp - 2008Asia Europe USA Others
59%15%
13%
10%
3%
Texas Instruments - 2008Asia Europe USA Japan Others
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Broadcom’s Common-sized Balance SheetBhavin Gandhi: [email protected] 9
Revenue, Income and AssetsComparison
Broadcom Corporation Texas Instruments, Inc.
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
6000
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999
Sales Assets Net Income
-5000
0
5000
10000
15000
20000
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999
Sales Assets Net Income
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Revenue and R&D spending
Broadcom Corporation Texas Instruments, Inc.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2008 2007 2006 2005 2004
Revenue R&D
0
2000
4000
6000
8000
10000
12000
14000
16000
2008 2007 2006 2005 2004
Revenue R&D
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Liquidity Ratios
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
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Qui
ck R
atio
Quick ratio comparison
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
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Cur
rent
Rat
io
Current ratio comparison
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Working Capital Management Ratios
2008 2007 2006 2005 2004
Broadcom 29.17 35.66 38.10 42.00 31.19
Texas Instruments 26.66 45.96 45.42 48.77 48.82
0.00
10.00
20.00
30.00
40.00
50.00
60.00
DSO
Days’ sales outstanding (DSO) comparison
2008 2007 2006 2005 2004
Broadcom 60.38 46.08 41.22 56.02 39.13
Texas Instruments 80.22 80.04 74.97 68.45 67.84
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
DSI
Days sales of inventory (DSI) comparison
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Measures of Profitability
2008 2007 2006 2005 2004
Broadcom 4.89 4.41 7.77 9.78 6.00
Texas Instruments 16.10 20.98 30.76 15.43 10.76
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Per
cent
age
Return on assets comparison
2008 2007 2006 2005 2004
Broadcom 5.95 5.29 9.04 11.69 7.33
Texas Instruments 20.59 26.64 37.72 19.47 13.42
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Per
cent
age
Return on equity comparison
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Measures of Profitability (contd..)
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
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
RO
S in
per
cent
ageReturn on sales comparison
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Financial Leverage Ratios
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
0.00
0.05
0.10
0.15
0.20
0.25
0.30
D/E
-ra
tio
Debt to equity ratio comparison
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Market Value Ratios
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
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
Am
ount
in d
olla
rsEarnings per share (EPS) comparison
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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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