Sunday, September 11, 2011

Broadcom to acquire NetLogic for $3.7 Billion

Broadcom will acquire NetLogic Microsystems in a deal valued at $3.7 billion ($50 per share) net of cash assumed.

NetLogic Microsystems, which is based in Santa Clara, California, adds a number of critical new product lines and technologies to Broadcom's portfolio, including knowledge-based processors, multi-core embedded processors, and digital front-end processors.

"This transaction delivers on all fronts for Broadcom's shareholders -- strategic fit, leading-edge technology and significant financial upside," said Scott McGregor, Broadcom's President and CEO. "With NetLogic Microsystems, Broadcom is acquiring a leading multi-core embedded processor solution, market leading knowledge-based processors, and unique digital front-end technology for wireless base stations that are key enablers for the next generation infrastructure build-out. Broadcom is now better positioned to meet growing customer demand for integrated, end-to-end communications and processing platforms for network infrastructure."

The companies expect the deal to close in the first half of 2012. Broadcom currently expects the acquisition to be accretive to earnings per share by approximately $0.10 on a non-GAAP basis in 2012.

Broadcom today also reiterated its business outlook for the third quarter of 2011. Broadcom expects revenue around the middle of the previously-guided range of $1.9 billion and $2.0 billion, GAAP product gross margins of flat to up slightly and GAAP research & development and selling, general and administrative expenses of flat to down $10 million in the third quarter of 2011. By the end of the third quarter, Broadcom also expects to have approximately $4.2 billion in cash and cash equivalents on hand, up from approximately $3.8 billion at the end of the second quarter.

  • Last week, NetLogic Microsystems unveiled its next generation of XLP II family of processors based on 28nm process technology, packing up to 80 high-performance NXCPUs per chip, and promising 5-7x performance enhancement over the existing XLP processors. Target applications for the new multi-core devices include next-generation LTE mobile infrastructure, data center, enterprise networking, storage and security platforms. NetLogic said its XLP II processor family is designed to deliver over 100 Gbps of network processing performance per device and over 800 Gbps in a clustered, fully-coherent system. The devices integrate up to 80 high-performance NXCPUs per chip, featuring an enhanced quad-issue, quad-threaded, superscalar out-of-order processor architecture capable of operating at up to 2.5 GHz to provide unmatched control and data plane processing and low-power profile.

  • In July, NetLogic Microsystems reported Q2 2011 revenue of $103.7 million, a 5.1% sequential increase from $98.7 million for the first quarter of 2011 and a 9.1% increase from $95.0 million for the second quarter of 2010. Net loss (GAAP) was $35.2 million or $0.51 per diluted share. By comparison, GAAP net loss was $4.8 million or $0.08 per diluted share for the second quarter of 2010.

  • In March 2011, NetLogic agreed to acquire Optichron, a privately-held, fabless semiconductor provider of 3G/4G LTE base station digital front-end (DFE) processors, for approximately $77 million in cash, $22 million for restricted stock units for employees of Optichron, and a possible maximum earn-out or approximately $108.5 million payable in 2013 if certain milestones are met. Optichron, which is based in Fremont, California, offers DFE technology for next-generation LTE systems requiring the highest data rates and lowest power consumption. The company said its DFE processors have been designed into next-generation base stations by multiple original equipment manufacturers (OEMs).

  • Broadcom's Previous Acquisitions

    security software $42 million  May 2011

    microwave radio silicon $313 million March 2011

    multimode LTE/WiMAX chipsets $316 million October 2010

    near field communications $47.5 million  June 2010

    EPON silicon $123 million February 201

    Sunext Design
    Blu-ray $48 million March 2008

    Global Locate
    GPS $146 million June 2007

    Ethernet switching silicon $80 million January 2006

    Athena Semi
    DVB-H $21.6 million October 2005

  • In 2009, NetLogic Microsystems acquired RMI, a developer of multi-core, multi-threaded processors, in a deal valued at approximately $175 million. The merger helped NetLogic Microsystems to expand into the high-performance "data-in-flight" processing segment. RMI's portfolio included its XLP, XLR and XLS Multi-Core, Multi-Threaded Processors, complementing NetLogic Microsystems' existing portfolio of knowledge-based processors, content processors, network search engines and 10-100 Gigabit Ethernet PHY products.

  • Ron Jankov has served as President, Chief Executive Officer and a member of the board of directors of NetLogic Microsystems since April 2000.

  • NetLogic Microsystems went public on July 9, 2004.

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