Broadcom Scoops Up SiByte for $2 Billion

In a pure networking play, Broadcom Corp. Monday bought chipmaker SiByte
Inc. for $2.07 billion.

The silicon solutions provider for broadband communications, nabbed SiByte
for its high-performance network processors, which it hopes will complement
Broadcom’s Internet Protocol (IP) switches, communications DigitalSignal
Processors, IP security solutions and physical layer transmission products.

Once integrated with Broadcom, SiByte’s products will provide the processing
required to move data at ultra-fast rates ranging from 1.0
Gigabit-per-second (Gbps) to 40 Gbps (OC-768). The firm’s solutions will be
targeted for high-speed Local Area Networks, Metropolitan Area Networks,
Wide Area Networks, Voice over Internet Protocol gateways, optical
networking and wireless communications.

For a firm like Broadcom, it is imperative that it focuses on the migration
of packet-based architectures from the much slower circuit-based connections
for its routers and switches.

The key to SiByte’s success is its Mercurian® suite — processors
solutions designed specifically to meet the needs of next-generation

Dr. Henry T. Nicholas III, president and chief executive officer of
Broadcom, said his firm would be adding Dan Dobberpuhl, SiByte’s president
and CEO, to its senior management and technical team.

Broadcom has been busy in the past year, having grabbed Allayer
Communications for $273.5 million in stock and the U.K.’s Element 14 for
$594.3 million in October among its 15 acquisitions since January 1999.

Yankee Group analyst Jay Patel said Broadcom has undergone quite an evolution — from developing
cable-modem chips in 1997 to branching out to cater to DSL, local-area network, wide-area network ,
metropolitan-area network and wireless arenas.

Patel said the firm can consider itself among the leaders in semiconductor solutions.

“With its enviable growth rate and foray into various communications markets, Broadcom is becoming a formidable competitor to specialty companies such as PMC-Sierra and Vitesse Semiconductor as well as semiconductor titans such as Intel and Motorola,” Patel said.

Broadcom will issue in aggregate up to 9.3 million shares of common stock in
exchange for all outstanding shares of SiByte’s preferred and common stock
and upon exercise of outstanding employee stock options and other rights of
SiByte. The deal is expected to close in two months.

As for SiByte, a leading provider of silicon products for fast data, voice
and video in next-generation networking systems, Cisco recognized the
qualities of the firm in May by joining in a $40 million investment round
with four other firms.

Cisco was also busy itself Monday. The networking expert pumped $150 million
into communications operator Cambrian Communications. Cisco is trying to
catch up to Lucent and Nortel Networks in the optical networking arena.

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