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.

1. Broadcom Corporation vs. Texas
Instruments, Inc.
Created by Bhavin Gandhi
Bhavin.Gandhi@igt.com
May 31st, 2009

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. 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. Broadcom’s Products Applications
 Broadband Communications
 Enterprise Networking
 Mobile & Wireless
Bhavin Gandhi: Bhavin.Gandhi@igt.com 4

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. TI’s Products Applications
 Communications
 Industrial
 Consumer Electronics
 Computing
 Automotive
 Education
Bhavin Gandhi: Bhavin.Gandhi@igt.com 6

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. 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. Broadcom’s Common-sized Balance Sheet
Bhavin Gandhi: Bhavin.Gandhi@igt.com 9

10. Broadcom’s Common-sized Income Statement
Bhavin Gandhi: Bhavin.Gandhi@igt.com 10

11. Texas Instruments’ Common-sized Balance Sheet
Bhavin Gandhi: Bhavin.Gandhi@igt.com 11

12. Texas Instruments’ Common-sized Income Statement
Bhavin Gandhi: Bhavin.Gandhi@igt.com 12

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