July 9 (Bloomberg) -- Broadcom Corp., the maker of chips for TV set-top boxes, abandoned its two-month campaign to buy Emulex Corp. after the target’s board rejected its latest offer as inadequate.

Broadcom ceased all efforts to buy Emulex and will focus on other options to boost growth, according to a statement today. Emulex’s directors said the $11-a-share bid undervalued its long-term prospects and urged shareholders to reject the offer.

The Southern California-based companies both sell chips that help server and storage computers transfer data. Emulex, which has refused to negotiate, said it will consider offers that reflect its “full value.” The drop in the share price suggests investors aren’t expecting a higher bid.

“Broadcom can be fine without it,” said Tristan Gerra, an analyst at Robert W. Baird & Co. in Milwaukee. “They could develop products internally, or there are other companies that could be bought.” He rates Broadcom shares “outperform” and doesn’t own any.

Emulex, based in Costa Mesa, declined 76 cents, or 7.8 percent, to $8.94 at 4 p.m. in New York Stock Exchange composite trading. Broadcom, in nearby Irvine, rose 96, or 4.1 percent, to $24.31 on the Nasdaq Stock Market.

Emulex shares closed at $6.61 on April 20, the day before Broadcom made its unsolicited $764 million offer. Broadcom raised its bid 19 percent to $912 million on June 29.

‘Value-Creating Alternatives’

During the bidding process, Emulex Chief Executive Officer James McCluney said Broadcom’s offer didn’t value Emulex’s potential gains in market share and sales highly enough. He refused to negotiate until Emulex got what he called an adequate bid.

Broadcom CEO Scott McGregor said that Emulex had a poor track record of turning new orders into revenue growth. Broadcom said today it will focus on “other value-creating alternatives” and emerging opportunities in the networking market.

Separately, Emulex said earnings in the quarter ended June 28 were at the high end of its forecast of 1 cent to 5 cents a share, excluding some costs. Sales were $78 million to $79 million.

To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

Last Updated: July 9, 2009 16:20 EDT