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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: Michael who wrote (3866)	5/2/2000 3:36:00 PM
From: Michael	Read Replies (1) \| Respond to of 6531

Broadcom Stock Surges on New Optical Chip May 2, 2000 by Reuters nytimes.com LOS ANGELES (Reuters) - The stock of Broadcom Inc. (BRCM.O) jumped sharply on Tuesday after the communications semiconductor maker unveiled its first chip for the white-hot optical networking market. While Broadcom said the move was its most significant announcement ``since the company went public,'' analysts said the full impact of its move into optical networking would not be felt for one to three years. Broadcom stock was up 9-3/4 at 184 in afternoon trading after rising as high as 187-3/4 on the New York Stock Exchange, where it was among the most active issues. ``It signals Broadcom's entry into a very large and attractive high-growth market,'' Salomon Smith Barney analyst Clark Westmont said. ``The symbolism of the announcement is more important than the particulars of the individual product that was announced,'' he said. Broadcom's arrival in the fast-growing optical networking field should have a ``very material impact,'' Chief Executive Henry Nicholas told Reuters in an interview. Irvine, Calif.-based Broadcom, the largest maker of semiconductors used for Internet access via cable-TV lines, said it has designed an optical networking chip that can be used in wide-area networks, which are larger than the local area networks limited to one or a few buildings. Broadcom was now offering the chip, technically known as a 10-gigabit-per-second Ethernet transceiver, on a sample basis at $88, compared with about $1,300 for existing chips using more expensive materials and manufacturing processes. Ethernet is the most widely used local area networking technology, and a 10-gigabit transceiver allows for the transmission of up to 10 billion bits of data a second. Nicholas said volume production of the chip could begin immediately and other products would be developed for the optical market. ``This is the first of many optical networking components that we'll be introducing over the next year,'' Nicholas said. Broadcom's move adapts its 10-gigabit technology for corporate local area networks using copper wires, where it has been a dominant supplier, and extends it into wide area fiber optic networks, WR Hambrecht analyst Jim Liang said. ``The fact that they're doing this increases their total available market size by about a billion dollars,'' Liang said. ''Once they introduce the product, given their significant cost advantage, it's going to make them very competitive in this market space,'' Liang said. Liang, who rates the stock a strong buy, said the chip could begin to have a significant impact on Broadcom in the next 12 months. ``We certainly view the announcement of the fact they're entering the optical networking chip market ... as very positive news for the company,'' Liang said. Westmont, noting that standards are still being developed for the market, said the new chip would not have a significant impact on Broadcom until 2002. ``I think 10 gigabit Ethernet will be a relative tiny market for the next two years but by the 2002, 2003 timeframe (the overall market) could be in the hundreds of millions of dollars a year type of range,'' he said.