NEW YORK (TheStreet) -- Shares of Avago Technologies (AVGO) are jumping, up 3.19% to $146 in pre-market trading Thursday, after the company said it would buy fellow chipmaker Broadcom Corp (BRCM) in a cash-and-stock deal valued at $37 billion.
The company which makes chips used in smartphones and supplies parts to Apple (AAPL) for its iPhones, is offering Broadcom shareholders $17 billion in cash and Avago shares valued at $20 billion.
The takeover offer values Broadcom at $54.50 per share. Yesterday, shares of Broadcom closed at $57.16 per share.
In addition, Avago Technologies is slated to release its latest quarterly earnings report after the closing bell today.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says he's watching Avago, and calls it the bellwether, the one that will determine how the higher performing chip stocks do.
For the second quarter ended in April, Wall Street is expecting Avago to report a profit of $2.01 per share on revenue of $1.635 billion, according to analysts surveyed byThomson Reuters.
In the same quarter of last year, the company earned 85 cents per share on revenue of $701 million.
Singapore-based Avago Technologies is a designer, developer and global supplier of a range of analog semiconductor devices with a focus on III-V based products.
The company serves three primary target markets including wireless communications, wired infrastructure, and industrial.
Insight from TheStreet's Research Team:
Antonia Oprita commented on Avago Technologies in a recent post on RealMoney.com. Here is what Oprita had to say about the stock:
Chip maker Avago Technologies (AVGO) said today that it will acquire Broadcom (BRCM) in a transaction consideration of $17 billion in cash and equity valued at approximately $20 billion as of May 27. Avago expects $750 million of projected annual cost synergies expected to be achieved within 18 months. The deal is expected to be immediately accretive to non-GAAP EPS and free cash flow.
- Antonia Oprita, 'Avago Could Buy Broadcom in Largest Semiconductor Takeover Ever' originally published 5/28/2015 on RealMoney.com.
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Separately, TheStreet Ratings team rates AVAGO TECHNOLOGIES LTD as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AVAGO TECHNOLOGIES LTD (AVGO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, increase in net income and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
You can view the full analysis from the report here: AVGO Ratings Report