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Broadcom buys chip firm
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November 28, 2000: 9:40 a.m. ET
Israeli chip maker provides company the ability to pause, rewind live TV
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NEW YORK (CNNfn) - Communications semiconductor provider Broadcom Corp. agreed to buy Israeli chip maker VisionTech Ltd. for nearly $777 million in stock Tuesday, a move designed to create a leading provider of integrated set-top boxes able to pause, replay and rewind live television.
Irvine, Calif.-based Broadcom (BRCM: Research, Estimates) agreed to swap 7.96 million of its shares for VisionTech, a privately held fabless semiconductor company that specializes in digital video and audio communications. The company's chips permit personal video recording (PVR), which enables viewers to freeze live television, instantly replay or rewind a program being watched.
The Herzlya, Israel-based firm's clientele base includes Motorola Broadband Communications, Scientific-Atlanta, Microsoft WebTV and Replay TV.
 Quoting a recent industry study, Broadcom noted that PVR-enabled set-top box shipments are expected to grow by 275 percent each year for the next three years.
"PVR is one of the most compelling consumer applications which will radically change the way people watch TV," said Henry Nicholas, Broadcom's president and chief executive, in a prepared statement. "VisionTech's capability to compress live video in real time will be used across all of Broadcom's product lines for applications ranging from distributed video over home networking to IP video streaming over the Internet."
The acquisition prolongs a torrid buying spree at Broadcom, which has used its high-priced stock to dramatically beef up its operations during recent months. The company has now spent nearly $6 billion in stock to make five acquisitions since the end of July alone.
Still, the deal's valuation was hurt by Salomon Smith Barney analyst Clark Westmont's decision Monday to slash his 12-month price target on Broadcom, noting signs of slowing in the company's supply chain.
The downgrade sent Broadcom shares tumbling $19.56 to a close of $97.56 in Monday trading, slashing about $156 million off the VisionTech merger's value. 
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Broadcom Corp.
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