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Apple Suppliers Broadcom, Qualcomm Could Battle For Xilinx: Analyst

Apple ( AAPL ) suppliers Broadcom ( AVGO ) and Qualcomm ( QCOM ) were pitted Tuesday in a theoretical battle to acquire Xilinx ( XLNX ) which, late Wednesday, is expected to report flat fiscal fourth-quarter sales along with down earnings. Xilinx stock was up 1.3% to 46.38 on the stock market today . It split the difference between gains by fellow takeover candidates Cavium ( CAVM ) and Marvell Technology Group ( MRVL ), up 3.4% and 0.75%, respectively. MKM analyst Ian Ing lists the trio among small- and medium-size fabless firms subject to acquisition as semiconductor companies scramble to serve the top 20 customers: Apple, Samsung, Cisco Systems ( CSCO ), Nokia ( NOK ), Ericsson ( ERIC ) and China’s Huawei, among others. “Customers prefer the fewest suppliers while preserving multi-sourcing choice,” Ing wrote in a research report. “Fabless companies can improve their operating models with more scale in manufacturing and operations.” Field-programmable gate array (FPGA) makers are proving attractive targets. In December, Intel ( INTC ) completed its acquisition of Altera, an FPGA-maker. For Broadcom, the technology would round out its networking and communications equipment needs. Qualcomm needs to diversify from its core mobile business which is threatened by chipsets and disagreements with licensees in China, Ing wrote. Ing expects Xilinx to tack on $3 earnings per share to 2017 run rates, “should a large acquirer apply scale benefits.” He rates Xilinx stock a neutral and has a 46 price target, noting it’s coming off a 2015 data center and communications trough. For Q4, which ended in December, Xilinx is expected to report flat sales of $566.2 million and adjusted earnings per share of 52 cents, down 10% year over year. For fiscal 2016, the consensus of 21 analysts models $2.2 billion and $2.03, down a respective 7% and 16.5%.

Goldman Sachs Calls 5G Winners: Verizon, Cisco, Intel, Broadcom

Verizon Communications ( VZ ) and AT&T ( T ) could shake up the U.S. residential broadband market by 2020 by deploying 5G wireless services to homes, challenging cable TV firms Comcast ( CMCSA ) and Charter Communications ( CHTR ), says Goldman Sachs. While 5G is expected to provide much faster data speeds, another market opportunity for AT&T, Verizon and T-Mobile US ( TMUS ) will be applications that require always-on, low-data-rate connections, says Goldman Sachs in a new research report. The apps involve data-gathering from industrial sensors, home appliances and other devices often referred to as part of the Internet of Things. Simona Jankowski, a Goldman Sachs analyst, says that some chipmakers, network gear suppliers and software companies will see an upside in 5G deployment. Jankowski says that Broadcom ( AVGO ), Qualcomm ( QCOM ), Intel ( INTC ), Cisco Systems ( CSCO ), cell tower operator Crown Castle ( CCI ), and bandwidth service provider Zayo Group Holdings ( ZAYO ) could see upside from 5G deployment. “We expect pre-standard 5G commercial deployments to begin in the U.S. in 2017, when AT&T and Verizon plan to be first in the world to roll out fixed wireless 5G broadband to the home, followed by pre-standard 5G mobile networks in Korea in time for the 2018 Olympics,” wrote Jankowski in the report. U.S. regulators are focused on opening up high-frequency airwaves , also called millimeter wave spectrum, for 5G services. “Europe led the 3G transition, with industry giants such as Ericsson ( ERIC ) and Nokia ( NOK ) leading the way,” said Jankowski. “With 4G, the baton passed to the U.S., driven by a new group of industry leaders such as Qualcomm and Apple ( AAPL ). With China, Korea and Japan targeting 5G rollouts on par with or ahead of their Western counterparts, it bears watching whether the wireless industry’s center of gravity shifts once again (to Asia).” The Goldman Sachs analyst says that 5G also could have upside for Cisco, Intel, Zayo and Crown Castle. “We view Cisco’s market leading position in IoT as a strategic differentiator, given that 5G will likely be closely coupled with IoT,”  Jankowski added. “We expect Intel’s server and networking business to benefit from increased data traffic and greater demand for compute-intensive data analytics. “As the largest operator of small cell networks in the U.S. and one of the largest pure-play providers of dark fiber in large metros respectively, Crown Castle and Zayo look well positioned for this long-term investment cycle.”

Europe About To Formally Open A New Front In Its War On Google

The European Union raced ahead with its antitrust probe against Google’s Android mobile-phone operating system, a sign that it’s poised to send out a formal complaint within days. EU regulators have given Google’s critics deadlines as short as 24 hours to remove business secrets from evidence that could be used in the case — a step seen as a sure sign that a statement of objections is on its way, according to two people, who asked not to be named because the process is private. Alphabet, Microsoft Join Amazon As Market Leaders; Breakout Soon? Alphabet ( GOOGL ) unit Google is one of the most high-profile targets for EU Antitrust Commissioner Margrethe Vestager. The EU’s speeding up of the Android probe follows the same pattern as last year’s escalation of a separate case targeting the company’s comparison shopping-search service. Google received antitrust objections just weeks after rivals got similar EU requests to declassify documents. Google’s advertising business and tax arrangements are also being reviewed by the EU. “In some markets Android has become very very big and we have had people coming to us with concerns,” Vestager told CNBC last week. The probe is “a high priority because these are fast-moving markets.” Two Google spokespeople didn’t immediately respond to requests for comment. The European Commission declined to comment because the investigation is ongoing. EU officials still need to meet with Google for so-called state of play talks — where companies are usually informed of regulators’ concerns before formal objections are sent. More than five years after the EU opened the search probe, it’s still weighing whether to fine Google or order it to change its business practices. In previous antitrust cases, the EU has forced Microsoft ( MSFT )  and Intel ( INTC ) to pay billions of euros in fines. The Android software for mobile phones has been in the EU’s sights since 2013 after it got a complaint from an industry group backed by Microsoft and Nokia ( NOK ). The EU opened a formal probe last year, examining Google’s agreements with smartphone and tablet manufacturers that make devices sold with Google apps already installed. The EU has been concerned in the past by Google’s bundling of apps such as Maps, YouTube and Chrome software with Android, questioning whether the practice harms independent developers of competing apps. The EU is also looking at whether Mountain View, California-based Google has stopped manufacturers developing and marketing their own versions of Android.