Broadcom bids $764M for Emulex
Skimming right over a first-quarter loss, Broadcom announced an offer to buy Emulex for $9.25 per share in cash, which works out to about $764 million.
As of mid-day, Emulex had still not responded publicly to the offer. Broadcom is reported to have been negotiating with Emulex since January, suggesting Emulex has some objection to the marriage, the dowry, or both.
The deal is about storage networking. The market is currently standardized on Fibre Channel technology, which is Emulex’s area of expertise, but is expected to gradually migrate to Ethernet, where Broadcom is strong. Having expertise in both technologies will enable the combined company to accelerate the development of converged solutions for enterprise networks, Broadcom said.
Broadcom says it has approximately $2 billion in cash and marketable securities, out of which it would pay for Emulex.
Broadcom also makes chips that constitute the heart of cable set-top boxes.
As for Broadcom’s first quarter, the company’s net revenue dropped by nearly a quarter sequentially to $853.4 million; compared with the first quarter of 2008, that represented a decrease of 17.3 percent.
The drop led to a net loss of $91.9 million. In the immediately prior fourth quarter, the company posted a net loss of $159.2 million. A year ago, the company reported net income of $74.3 million.
The company sees signs of relief in the midst of recession. Broadcom President and CEO Scott A. McGregor said, "As we progressed through the first quarter, customer bookings strengthened, which is reflected in our anticipated sequential revenue growth in the second quarter of 2009."