NetLogic Microsystems Shares Skyrocket: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NetLogic Microsystems (NAS: NETL) have shot a whopping 50% on news the company would be bought out by Broadcom (NAS: BRCM) .

So what: Broadcom is paying an incredible 57% premium from Friday's closing price for NetLogic to expand the company's product line in network communication chips. NetLogic shareholders will be paid $50 per share giving the deal a total value of $3.7 billion net of cash.

Now what: Some analysts are scratching their heads over the price Broadcom is paying for NetLogic, but few question that it is a wise deal for both sides. Baird analyst Tristan Gerra said "the acquisition is synergetic for Broadcom, providing long-term growth opportunities." Considering that NetLogic is closing in on the offer price, it might be time to set a limit order and cash out to avoid the risk of a deal closing. I wouldn't be in a greedy mood after the 50% gain today.

Interested in more info on NetLogic Microsystems? Add it to your watchlist.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.