Report Helps Broadcom Shares Regain 12%

Broadcom Corp.’s battered stock rebounded a bit Wednesday after a brokerage upgraded its rating of the Irvine chip maker’s shares.

Morgan Stanley Dean Witter raised its rating to strong buy from outperform, citing the stock’s recent sharp sell-off and praising its latest acquisition. Analyst Mark Edelstone described Broadcom as one of the best-positioned semiconductor companies.

The stock climbed nearly 12%, or $9.94 a share, to $95--still more than $100 below its trading levels earlier in the month. Trading remained heavy, as more than 21.3 million shares changed hands on the Nasdaq market.

In a note Wednesday, Edelstone said he believes estimates for the communications chip company are solid. Morgan Stanley estimates Broadcom’s fourth-quarter earnings at 31 cents per share--about double per-share earnings a year earlier. The firm estimated Broadcom’s 2001 earnings at $1.50 per share.

Broadcom’s announcement Tuesday that it will acquire VisionTech Ltd., an Israeli manufacturer of chips for digital video recording, is more good news, Edelstone said, calling the acquisition “highly strategic” and “complementary.”

“VisionTech products have the potential to ramp quickly in 2001 and generate revenue that comfortably exceeds $10 million per quarter by the end of the year,” he wrote.

WR Hambrecht & Co. analyst Jim Liang reiterated a buy rating Wednesday in response to the VisionTech deal, which he also praised.

The stock had slumped Monday after another analyst predicted that the shares will rise less than he had previously forecast.

Salomon Smith Barney analyst Clark Westmont told clients he expects Broadcom shares to rise to $200, down from an earlier target of $300. He cited such factors as inventory concerns in the digital cable sector and “flattening orders in Broadcom’s supply chain.”