As broadband-chip-supplier Broadcom Corp. moved toward its
initial public offering of stock last week, indications were that it had the right
connections to make a bold debut..
The Irvine, Calif.-based company's IPO of 3.5 million
shares was originally scheduled to go at $10 to $12 per share, with networking giant Cisco
Systems Inc. scooping up another 500,000 shares in a separate offering. But recent
Broadcom deals -- notably a supply contract with General Instrument Corp. -- helped to
bump the price up to $18 to $20 per share. The stock was scheduled to hit the market last
Friday.
At $20 per share, Broadcom's market capitalization would be
$860 million, for a company with $37 million in sales last year and a loss of just over $1
million.
Broadcom is riding a wave of optimism about cable's
broadband infrastructure.
"I'm not surprised that its price is moving up,"
said Mark Brown, an analyst with Los Angeles-based IPO-rating firm Market Analytics.
"Broadcom plays into this market in a number of
different ways," said Eileen Ohnell, an analyst with Renaissance Capital IPO Fund of
Greenwich, Conn.
Broadcom's products appear in digital set-top boxes, cable
modems, high-speed networks, direct-broadcast satellite and ADSL (asymmetrical digital
subscriber line, the telcos' high-speed-data technology) gear. Broadcom claims a 95
percent market share in digital cable.
The company has made some solid connections, including
selling equity stakes to GI and Intel Corp., in addition to Cisco. And it has a track
record of meeting customer demand since 1991.
