Broadcom takes another step in growing its networking capabilities with its $195 million purchase of BroadLight, a month after closing its $3.7 billion deal for NetLogic.
Broadcom is buying BroadLight in a move designed to enhance
its broadband access portfolio by adding BroadLights passive optical network
In the deal, announced March 21, Broadcom officials said they
will pay $195 million in cash for the 12-year-old BroadLight, and could pay an
additional $10 million if certain performance goals are met.
Broadcom, a semiconductor vendor, said the addition of
BroadLight and its integrated networking and fiber access PON chips will enable
Broadcom to better meet customer demands related to next-generation fiber
networks worldwide. Such networks are required to meet the rising need for more
bandwidth as the demand for such applications as high-speed Internet and
high-definition TV grows, according to Dan Marotta,
executive vice president and general manager of Broadcom's Broadband
"The need for increased bandwidth for IPTV services,
HDTV broadcasting and high-speed Internet access are driving momentum for
deploying fiber networks," Marotta said in a statement.
Combining BroadLight's PON solutions with the strength of Broadcom's
broadband access portfolio will enable us to offer a complete, end-to-end
solution for customersfrom OLT [optical line terminal] at the central office
to CPE [customer-provided equipment] at the home. BroadLight's strong
engineering team and broad IP will complement and extend our ability to deliver
next-generation access technologies to customers."
Broadcom officials expect the deal to close in the second
The deal comes as Broadcom, whose chips run in mobile devices
like smartphones and tablets and in TV set-top boxes, looks to aggressively
grow its capabilities in the networking space. The vendor last month closed its
$3.7 billion deal for network
chip maker NetLogic Microsystems
, whose low-power processors featured
built-in network intelligence.
Ross Seymore, managing director of U.S. semiconductor
research for Deutsche Bank Securities, said in a note that BroadLight was
another strategic tuck-in deal for Broadcom.
Similar to [Broadcoms] other recent smaller acquisitions ¦
this deal appears to fall in-line with [Broadcoms] strategy to acquire private
semi companies with specific technologies that should drive further customer
penetration of the company's product portfolio into emerging, potentially high
growth end markets, Seymore wrote. We believe this acquisition complements [Broadcoms]
strong position as a provider of chips and software used in business and
residential gateways as well as TV set-top boxes, specifically in the PON space
that should experience fast subscriber growth globally in coming years.
In January, Broadcom executives announced that the company
saw revenues in the fourth quarter 2011 drop 6.4 percentto $1.82 billionfrom
the same period in 2010. Income fell from $266 million in the fourth quarter of
2010 to $254 million in the same period last year.
For all of 2011, Broadcom earned $927 milliondown from $1.08
billion in 2010on revenues of $7.39 billion, an 8.4 percent jump from $6.82
billion in 2010.