In a move to boost the capacity and speed of broadband offerings, high-speed chipmaker Broadcom Corp. Tuesday bought software firm Digital Furnace Corp. for $136 million in stock.
Broadcom (BRCM)
will issue 664,735 shares of its Class B common stock and reserve 85,265
additional shares of its Class B common stock for all Digital Furnace equity.
Broadcom’s interest in the company stems from Digital Furnace’s core
technology Propane — a patent-pending software solution that runs on
Broadcom’s chip sets. Propane improves efficiency and reduces latency in
broadband networks, allowing Web pages to load much faster.
Broadband cable operators are moving aggressively to introduce services to
the fast-growing Internet access and telephony markets. According to
Forrester Research, Inc., 26 million households will have Internet access
via cable modems by 2005, and 20 percent of U.S. households will have
telephone service via cable-connected phones. This is where the high-flying
software of Digital Furnace arrives as Propane provides cable operators with
a tool that can increase this reverse-path capacity up to three times.
“High-speed Internet access, multiple telephony lines, computer networking,
security and videoconferencing all create higher and higher demand for
network capacity,” said John Lappington, Digital Furnace’s chief executive officer, president
and co-founder. With the added capacity provided by
Propane, cable operators deploying Broadcom-based communications equipment
can now greatly increase their number of interactive customers and resulting
service revenue over existing broadband networks.”
The operations and employees of Digital Furnace will be integrated with
those of Broadcom’s Residential Broadband Business Unit, based in Atlanta.
Last January, Broadcom snagged BlueSteel
Networks, a developer of Internet security processors, for $110 million.
Broadcom inked the deal to integrate security and encryption features into
its chips.