NEW YORK (TheStreet) -- Shares of Brocade Communications Systems (BRCD) were advancing 7.26% to $11.37 on heavy trading volume late-afternoon Tuesday as Irvine, CA-based Broadcom (AVGO) is nearing a deal to buy the network provider, sources said, according to Reuters.
A deal could be announced later this week.
Bloomberg reported yesterday that Brocade was in talks of selling itself and that Broadcom was one of several interested buyers.
If the chipmaker negotiates a deal with San Jose, CA-based Brocade, it would keep Brocade's fiber channel and storage unit, while possibly divesting its networking business, Reuters reports.
Brocade's fiber channel and storage business generates about $1.5 billion in annual revenue.
Shares of Broadcom were retreating in late-afternoon trading on Tuesday.
About 22.79 million shares of Brocade have been traded so far today, well above the company's average trading volume of roughly 5.43 million shares a day.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
The team rates Brocade as a Buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. The team feels its strengths outweigh the fact that the company has had sub par growth in net income.