Broadcom climbs on news of S&P 500 entry
Shares of the high-flying chipmaker surge as much as 14 percent after announcing the company will be added to the Standard and Poor's 500 index.
Broadcom will replace GTE, which is being acquired by Bell Atlantic, at a date to be announced. Shares of companies typically move higher as they are added to the S&P indices because the mutual funds that track those benchmarks have to purchase shares.
Broadcom shares were trading at $166 this morning, up $18.50 or more than 12.5 percent. However, that's still well off the company's 52-week high of $253.
Being added to the index is the latest sign that the Orange County, Calif.-based company is now part of the upper echelon of technology. Chief executive Henry Nicholas and chief technical officer Henry Samueli are now both billionaires, as the company's shares have soared since going public in April 1998.
Broadcom has been on an acquisition tear to grow as fast as possible as it tries to make chips for a wide range of Internet-era devices such as cable modems, set-top boxes and home and corporate networking gear.
Last week, the company said it would spend roughly $440 million in stock to acquire Innovent Systems, a maker of so-called Bluetooth chips that allow handheld devices to share information wirelessly. The deal was the company's largest ever purchase and the 10th acquisition announced since the start of 1999.