Leading semiconductor solutions provider Broadcom Corporation (BRCM) and QLogic Corporation (QLGC), a leading supplier of network infrastructure solutions, have recently entered into an agreement for the sale of certain 10/40/100Gb Ethernet controller-related assets by Broadcom to QLogic.
The agreement includes non-exclusive licenses to certain intellectual property relating primarily to Broadcom’s programmable NetXtreme II Ethernet controller family. The transaction, worth approximately $147 million, is expected to close in the first quarter of 2014.
As a part of the deal, Broadcom will become an application-specific integrated circuit (ASIC) supplier to QLogic for the support of the NetXtreme II controllers. This transaction helps Broadcom to provide a broader solution portfolio to its customers through the involvement of QLogic as a partner. At the same time, the transaction is also expected to be accretive to Broadcom’s earnings per share in 2014.
On the other hand, QLogic expects this deal to be immediately accretive to revenue and non-GAAP earnings per share. With this agreement, QLogic is expected to license certain Broadcom patents covering its Fibre Channel products for a license fee of $62 million.
The long-term partnership with Broadcom will further enable QLogic to provide end-to-end solutions in the field of Ethernet controllers to its enterprise customers. Broadcom is well placed in the fast-growing wired and wireless communications markets, with cutting-edge solutions for a growing number of connected users, who are demanding more content and bandwidth.
Based in Irvine, CA, Broadcom is engaged in designing and marketing semiconductor components of network voice, video, and data traffic for various applications. The company continues to drive innovation and engineering excellence across a broad range of communication end markets to help its customers enhance device performance and overall efficiency.
Broadcom currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look in the industry include FormFactor Inc. (FORM) and Himax Technologies, Inc. (HIMX), each carrying a Zacks Rank #2 (Buy).Read the Full Research Report on QLGC
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