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Broadcom Boosts Estimate for Initial Share Price Range

April 09, 1998| Dow Jones

IRVINE — Broadcom Corp., which makes high-speed chips and is planning to go public next week, boosted the estimated price range for its initial stock offering by 80%.

The price estimate was increased to $18 to $20 a share, said an official at Morgan Stanley Dean Witter, the lead underwriter for the offering. Broadcom originally estimated the initial offering price at $10 to $12.

"It's a rare phenomenon," said Richard Peterson of Securities Data Corp., a New Jersey data research firm.

Peterson said the increase is a sign the shares are being bid up by institutional investors, and the company is taking advantage of the demand.

Analysts speculated the demand is being caused by Broadcom's recent announcement that it had entered into a partnership with General Instrument Corp. to develop integrated silicon systems for General Instrument's advanced interactive digital set-top terminals.

Terms of the deal haven't been disclosed, but under the pact, General Instrument has agreed to purchase a guaranteed percentage of integrated circuits from Broadcom in each of the next four years.

The size of Broadcom's offering hasn't changed. The company is selling 3.5 million shares, of which 2.75 million are being sold by the company and 750,000 by existing shareholders.

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