Broadcom Buys More Bluetooth for $49M

Broadband communications chipmaker Broadcom Monday
said it will purchase Bluetooth software provider WIDCOMM in a stock and
cash transaction worth an estimated $49 million.

The two companies are very familiar with each other after working over the last
year on compatibility and sometimes finding their technologies in the same
phones, headsets, handheld computers, mice and keyboards.


San Diego-based
WIDCOMM’s software has been in the market for more than three years and is
strongly steeped in Windows-based products as well as other embedded
infrastructures.

“We see a great opportunity to use our software in other Broadcom-based
system solutions for future wireless products, such as smart phones,
consumer devices, broadband gateways and digital set-top boxes,” WIDCOMM
president and CEO Bob Hunsberger said in a statement.

Broadcom’s investment also speaks to the 39 percent of adult surfers who
now have a broadband connection at home. DSL is largely responsible
for home broadband growth, as Pew Internet & American Life Project reports
that DSL subscriptions have catapulted from 28 percent of market share in
March 2003 to 42 percent in 2004.

“The acquisition of WIDCOMM should provide many more opportunities for
adoption of Broadcom Bluetooth silicon in this rapidly growing market in
which we expect to see a 60 percent annual growth rate for chipsets over
five years,” said Joyce Putscher, Director of Convergence Research at
In-Stat/MDR.

By adding WIDCOMM to its fold, Broadcom said it now gains not only 100
end products but also better relationships with more than 80 PC and PDA OEMs
including Dell, HP, IBM, Logitech, Panasonic, Samsung, and Sony. Broadcom’s
current customer list also includes Dell and HP as well as Motorola, and
Cisco Systems.

Broadcom is no
stranger
to Bluetooth, already launching its own Bluetooth-qualified
single-chip radio. The company’s Blutonium line of products includes devices
for mobile phones, PCs and PDAs, as well as application-specific chips for
cellular phones and wireless mouse and keyboard applications.

The acquisition is the third in as many months for Irvine, Calif.-based
Broadcom. The company recently took over a handful of storage technology
patents from Cirrus Logic as well as spending close to $77.5 million for
MPEC compression developer Sand Video earlier this month.


Broadcom has been
working hard to outdo its competition, which includes Agere, Intel and Texas
Instruments, and cuts costs by outsourcing production to Asian foundries such
as TSMC, SMIC, Silterra, and UMC.

The boards of directors of both companies approved the merger but now
must wait for approval by privately-held WIDCOMM’s shareholders and the
usual regulatory requirements. Broadcom said the transaction should be
finalized by the end of June and has offered to put up $3 million in
cash as part of the purchase price to make sure it does.

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