Broadband Briefs for 07/01/09
• Emulex shares drop after Broadcom's 'best' offer
By The Associated Press
NEW YORK (AP) – Shares of Emulex Corp. dropped Tuesday after chip designer Broadcom Corp. raised its buyout offer for the network equipment maker to $11 per share in cash, saying it is the best offer it plans to make. In all, the new offer is worth about $912 million, up from $764 million. Emulex said it will review the new bid.
Broadcom had initially approached the company about a possible buyout in December 2008, but Emulex said it was not for sale. Broadcom has been pursuing Emulex since.
Baird analyst Jayson Noland kept a "Neutral" rating on Emulex following the latest offer. He said while a higher bid is possible, the company's stock is more at a risk to decline than to advance, at least over the short term. He said it was clear from Broadcom CEO Scott McGregor's letter to Emulex that the $11 per share bid was the company's "last and final offer." Noland raised his target price to $12 from $10.
BMO Capital Markets analyst Keith Bachman, who rates Emulex "Market Perform," said the higher bid is not surprising. “Emulex's response continues to make it very clear that it has no interest in this transaction," the analyst wrote. He also noted that the company's management and board seem to agree on this. But, he added, at a higher price than $11, "we wonder if Emulex's board of directors and management would possibly have different views on the appropriate outcome – meaning the board might consider selling."
• Qwest CEO seeks judgment in SEC complaint
By The Associated Press
DENVER (AP) – Former Qwest CEO Joseph Nacchio asked a judge Tuesday to decide in his favor in a Securities and Exchange Commission lawsuit, saying the company's stock plunge was the result of a telecommunications industry meltdown, not financial fraud.
In a separate filing Tuesday, SEC attorneys said insider trading allegations included in the lawsuit have already been proven in Nacchio's criminal case and asked a judge for summary judgment.
The SEC lawsuit, filed in 2005, alleges that actions by Nacchio and other former Qwest Communications International Inc. executives allowed the Denver-based company to improperly report revenue. Two former accountants responsible for preparing Qwest financial statements have also asked a judge for summary judgment, saying they did not have final authority over the statements' contents.
Nacchio argued in his motion, also filed Tuesday in federal court in Denver, that Qwest's stock plunged 87 percent from its high by March 2002, during which time the Nasdaq Telecommunications Index lost 86 percent of its value. A hearing on the motions for summary judgment has not been scheduled.