Broadcom vs. texas instruments ppt

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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.

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Broadcom vs. texas instruments ppt

  1. 1. Broadcom Corporation vs. Texas Instruments, Inc. Created by Bhavin Gandhi Bhavin.Gandhi@igt.com May 31st, 2009
  2. 2. Topics to be covered  Overview of Broadcom Corporation  Overview of Texas Instruments, Inc.  Business comparison  Financial Statement’s comparison  Financial Ratio comparison  Conclusion  Questions Bhavin Gandhi: Bhavin.Gandhi@igt.com 2
  3. 3. Broadcom Corporation  Address: 5300 California Avenue, Irvine, CA 92617  URL: http://www.broadcom.com  Founded: August, 1991  Ticker: BRCM  Employees: 7,402 Bhavin Gandhi: Bhavin.Gandhi@igt.com 3
  4. 4. Broadcom’s Products Applications  Broadband Communications  Enterprise Networking  Mobile & Wireless Bhavin Gandhi: Bhavin.Gandhi@igt.com 4
  5. 5. Texas Instruments, Inc. (TI)  Address: 12500 Texas Instruments Blvd, Dallas, TX 75266  URL: www.ti.com  Founded: 1972  Ticker: TXN  Employees: 29,537 Bhavin Gandhi: Bhavin.Gandhi@igt.com 5
  6. 6. TI’s Products Applications  Communications  Industrial  Consumer Electronics  Computing  Automotive  Education Bhavin Gandhi: Bhavin.Gandhi@igt.com 6
  7. 7. Revenue Distribution by Products Broadcom Corp - 2008 Texas Instruments - 2008 Broadband Communication Enterprise Networking Communications Computing Industrial Mobile and Wireless Consumer Automotive Education 6% 4% 36% 37% 10% 48% 10% 22% 27% Bhavin Gandhi: Bhavin.Gandhi@igt.com 7
  8. 8. Revenue Distribution by Regions Broadcom Corp - 2008 Texas Instruments - 2008 Asia Europe USA Others Asia Europe USA Japan Others 1% 3% 10% 30% 13% 60% 59% 10% 15% Bhavin Gandhi: Bhavin.Gandhi@igt.com 8
  9. 9. Broadcom’s Common-sized Balance Sheet Bhavin Gandhi: Bhavin.Gandhi@igt.com 9
  10. 10. Broadcom’s Common-sized Income Statement Bhavin Gandhi: Bhavin.Gandhi@igt.com 10
  11. 11. Texas Instruments’ Common-sized Balance Sheet Bhavin Gandhi: Bhavin.Gandhi@igt.com 11
  12. 12. Texas Instruments’ Common-sized Income Statement Bhavin Gandhi: Bhavin.Gandhi@igt.com 12
  13. 13. 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 Bhavin Gandhi: Bhavin.Gandhi@igt.com 13
  14. 14. 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 2005 2004 2008 2007 2006 2005 2004 Revenue R&D Revenue R&D Revenue and R&D spending Bhavin Gandhi: Bhavin.Gandhi@igt.com 14
  15. 15. Liquidity Ratios Quick ratio comparison Current ratio comparison 5.00 6.00 4.50 5.00 4.00 3.50 4.00 3.00 Current Ratio Quick Ratio 2.50 3.00 2.00 2.00 1.50 1.00 1.00 0.50 0.00 0.00 2008 2007 2006 2005 2004 2008 2007 2006 2005 2004 Broadcom 3.17 3.69 4.51 3.40 2.78 Broadcom 3.84 4.18 4.94 3.90 3.17 Texas Instruments 2.25 2.30 2.64 2.94 4.08 Texas Instruments 3.78 3.42 3.78 3.96 5.33 Bhavin Gandhi: Bhavin.Gandhi@igt.com 15
  16. 16. Working Capital Management Ratios Days’ sales outstanding Days sales of inventory (DSO) comparison (DSI) comparison 60.00 90.00 80.00 50.00 70.00 40.00 60.00 50.00 DSO DSI 30.00 40.00 20.00 30.00 20.00 10.00 10.00 0.00 0.00 2008 2007 2006 2005 2004 2008 2007 2006 2005 2004 Broadcom 29.17 35.66 38.10 42.00 31.19 Broadcom 60.38 46.08 41.22 56.02 39.13 Texas Instruments 26.66 45.96 45.42 48.77 48.82 Texas Instruments 80.22 80.04 74.97 68.45 67.84 Bhavin Gandhi: Bhavin.Gandhi@igt.com 16
  17. 17. Measures of Profitability Return on assets Return on equity comparison comparison 35.00 40.00 30.00 35.00 30.00 25.00 25.00 Percentage Percentage 20.00 20.00 15.00 15.00 10.00 10.00 5.00 5.00 0.00 0.00 2008 2007 2006 2005 2004 2008 2007 2006 2005 2004 Broadcom 4.89 4.41 7.77 9.78 6.00 Broadcom 5.95 5.29 9.04 11.69 7.33 Texas Instruments 16.10 20.98 30.76 15.43 10.76 Texas Instruments 20.59 26.64 37.72 19.47 13.42 Bhavin Gandhi: Bhavin.Gandhi@igt.com 17
  18. 18. Measures of Profitability (contd..) Return on sales comparison 35.00 30.00 25.00 ROS in percentage 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 Bhavin Gandhi: Bhavin.Gandhi@igt.com 18
  19. 19. Financial Leverage Ratios Debt to equity ratio comparison 0.30 0.25 0.20 D/E - ratio 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 Bhavin Gandhi: Bhavin.Gandhi@igt.com 19
  20. 20. Market Value Ratios Earnings per share (EPS) comparison 3 2 1 0 -1 Amount in dollars -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 Bhavin Gandhi: Bhavin.Gandhi@igt.com 20
  21. 21. Conclusion  Inflation in semiconductor industry  Increasing cost of manufacturing  Growing importance of Consumer market  Texas Instruments proves to be the winner Bhavin Gandhi: Bhavin.Gandhi@igt.com 21
  22. 22. Questions?? Contact Details: Bhavin Gandhi Bhavin.Gandhi@igt.com

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