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RICHARD COLE
Broadcom is continuing its buying binge, agreeing to pay about $2 billion in stock for privately held SiByte.
Broadcom's latest and largest acquisition underscores the integrated circuit maker's strategy to become a one-stop shop for networking equipment, analysts say.
"Where it really helps is on the networking infrastructure side," says Sean Badding, VP-business development at Carmel Group. "The deal is pretty expensive, but in the long run it's going to work out for them in terms of really strengthening the broadband side of the market."
SiByte's SB-1250 chips move data on local area networks as well as wireless communications and voice-over Internet.
In a DSL access multiplexor or cable-modem headend, the chip processes incoming information packets and passes them onto the Internet. In effect, the SiByte puts network traffic control into a chip instead of software, allowing a higher-speed transmission in lower-power equipment.
SiByte hasn't produced the chip yet but has booked orders for more than 1.3 million units, accounting for Riverside, Calif.-based Broadcom's willingness to pay a hefty price.
"This combination, along with Broadcom's existing strength in CPE (customer premises equipment), gives the company an end-to-end play for DSL and cable modem broadband connections," says Linley Gwennap, principal analyst at the Linley Group.
Broadcom CEO Henry Nicholas says the purchase not only beefs up the company's portfolio in network processing and LANs, but brings in SiByte's highly trained staff of 120 engineers.
SiByte founder/CEO Dan Dobberpuhl, who helped develop the Alpha microprocessor earlier in his career, will join Broadcom's senior management.
The acquisition is Broadcom's 16th since January 1999 and 11th this year.
SiByte's financial backers include Cisco Systems and Juniper Networks, along with Canada-based ATI Technologies and other venture capital companies.
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