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Chipmaker Continues Buying Spree

Broadcom Corp. Monday snatched up optical communications chip maker NewPort Communications Inc.

The all-stock transaction is estimated to be worth $1.24 billion and requires that Broadcom issue more than 5.5 million shares of common stock to seal the deal.

The acquisition adds OC-48 and OC-192 Synchronous Optical Network transceivers, framers, and serial 10-Gigabit per second Ethernet technology to Broadcom's integrated circuit line-up.

The deal is yet another acquisition for the aggressive chipmaker that competes with rivals like Lucent Technologies Inc., JDS Uniphase Corp. and SDL Inc.

Dr. Henry T. Nicholas III, Broadcom president and chief executive officer, said the acquisition is a key step in advancing its goal to provide Internet communications solutions designed to leverage broadband communication networks worldwide.

"The announcement reinforces Broadcom's strategic initiative to provide end-to-end solutions across Metropolitan and Wide Area Networks," Nicholas said.

Dr. Armond Hairapetian, NewPort Communications president and chief executive officer, said the companies combined capabilities and resources would bring one of the most complete system solutions to the optical communications marketplace.

"Broadcom's market presence and proven ability to deliver innovative, cost-effective silicon solutions and NewPort's complementary intellectual property and talented engineering pool together promise to speed up the timetable for delivering complete solutions for MAN and WAN networks,'' Hairapetian said.

Earlier this month Broadcom acquired Silicon Spice Inc., a leading developer of gateway and carrier access chipsets. Broadcom sought Silicon Spice's unique signal processing architecture, which is capable of fueling its Voice over Internet Protocol ambitions.

Nicholas said NewPort Communication's SONET/Synchronous Digital Hierarchy expertise is synergistic with its 10-Gigabit Ethernet technology as well as complementary to the communications processor technology acquired by its Silicon Spice acquisition.

"Together these acquisitions will provide Broadcom with a powerful platform to address the rapidly growing wide area-networking marketplace," Nicholas said.

The merger provides Broadcom with and expansive offering of CMOS optical communications technologies for the next generation SONET/SDH and 10-Gigabit Ethernet networks. Specifically, Broadcom will be able to offer optical communications and laser module suppliers with a broad portfolio of optical MAN and WAN infrastructure products.

NewPort a achieved major industry milestones when it introduced the world's first single-chip 2.5 Gigabit-per-second OC-48 transceiver in July 1999 and the world's first 10 Gigabit-per-second CMOS OC-192 transceiver solution in May this year.

The devices offer substantially higher levels of integration and lower power than competitive silicon solutions.

Broadcom seeks to leverage the explosive growth in Internet traffic, which demands ten-fold increases in network bandwidth needs every two years. It also intends to tap into WAN optical networking chip demand to earn a major piece of the market forecast to be worth over $1.3 billion by 2001.

The NewPort transaction is expected to close within 60 days. Both boards have approved the merger, which awaits approval by NewPort's shareholders and the satisfaction of regulatory requirements and other customary closing conditions.

Broadcom expects to record a one-time write-off for purchased in-process researcha