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Broadcom IPO soars
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April 17, 1998: 1:33 p.m. ET
Investors pile in, drawn by company's earnings potential, Internet ties
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NEW YORK (CNNfn) - In yet another sign of investor euphoria with the Internet, shares of Broadcom Corp. soared 145 percent by midday after they began trading publicly on the Nasdaq Friday.
Broadcom (BRCM), which makes chips for high-speed data transmission over cable lines, priced its 3.5-million share offering at 24. Shares were up 35 to 59 in midday trading.
When the Irvine, Calif.-based company first filed to go public, it expected shares would sell in the range of $10 to $12 per share.
Broadcom has been one of the most talked about initial public offerings in recent weeks, largely because of its association with the Internet. Among Broadcom's products are chips for cable set-top boxes, which enable Internet access via television sets.
In March, Broadcom signed a deal with General Instrument Corp. to be the sole chip provider of GI's set-top boxes for the next four years.
"It's phenomenal but it's not surprising," said Eileen Ohnell, an analyst at Renaissance IPO Fund. "There was a lot of publicity and interest surrounding their IPO. The company is in a hot area."
Ohnell said that unlike the Internet search engine companies that have seen their stocks skyrocket, Broadcom offers tangible products and sales figures that appeal to investors.
"They're appealing in this kind of growth area with Internet companies, but they have real sales and almost break-even earnings," she said. "They also have a number of products that offer slightly different solutions and are at different maturity levels."
Broadcom was profitable from its inception in 1991 to 1996, but lost $1.2 million, or 4 cents a share, in 1997 on $37 million in revenues.
Ohnell also said the company's focus - higher bandwidth for Internet access and data transmission - and its diversity of products also appeal to investors.
In addition to cable set-top boxes, Broadcom makes cable modems, high-speed networking products and digital broadcast satellites. 
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