After Trump halted the Broadcom Qualcomm deal, we wanted to take a look at both companies’ Technology Portfolio to better understand what the implications would be in case of the acquisition to materialize.
Form the InnoGPS maps we notice how Broadcom is currently lacking technologies within the “Building, Ships, and Hydraulic” sectors relative to the more comprehensive portfolio of Qualcomm, which retains most of Broadcom capabilities in the core fields of “Electric Communications” and their applications.
Both companies have a relative similarity index of 0.99 which confirms the high relatedness between their technological knowledge.
Although Broadcom and Qualcomm portfolios are very similar, the latter is identified by InnoGPS by a higher InnoDEX of 29.7 relative to Broadcom’ s 10.4.
From a technology stand point we can conclude that the acquisition of Qualcomm by Broadcom is justified given the lack of capabilities that the latter is looking to acquire in order to complement their current portfolio and increase their technical capabilities hence InnoDEX.
For a more comprehensive understanding of the deal, is always suggested to combine fundamental analysis with classic financial analysis in order to gauge and holistic awareness of the drivers of such deals.
To date Broadcom had stellar results with growth of over 1000% since 2009.
Qualcomm on the other hand, since 2014 failed to keep a sustained growth path and is currently underperforming both the Sector and the broader market.
Furthermore, QCOM revenues had been steadily declining over the last three years, with most of the revenue sources coming from licensing of their big technology portfolios.
This suggests that QCOM has not been focusing on active innovation growth but rather became complacent to the status quo.
Given the above conditions and a P/E valuation substantially below sector the sector, also from a financial stand point the acquisition by Broadcom seems to make sense.
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