Canadian Pact Spurs 24% Jump for Broadcom Shares

Shares of Broadcom Corp., the leading U.S. cable-modem chip maker, surged 24% after the Irvine company said it will supply Canadian phone giant Northern Telecom Ltd. with a high-speed communications technology.

Broadcom’s shares climbed $12.57 to $66.50 in trading of 4.6 million, almost three times its three-month daily average. Morgan Stanley Dean Witter analyst Mark Edelstone raised his rating on Broadcom to “outperform” from “neutral.” NationsBanc Montgomery Securities analyst Clark Westmont initiated coverage with a “buy” rating.

Broadcom said its very-high-speed technology will be incorporated into Nortel’s VDSL broad-band network, a product that allows for rapid transmission of voice, data and video over phone lines. Telephone companies can use the technology to broaden service offerings and offer video programming in competition with cable-TV operators.

The contract is important to Broadcom because Nortel is the No. 2 phone-equipment maker in North America.

“They got one of the biggies--one of the big telecom-equipment suppliers that has jumped in and is supporting this technology,” said Gregory Sheppard, an analyst with Dataquest, a unit of the Gartner Group Inc. “Broadcom has a reputation for getting in early with a technology and becoming the dominant supplier.”