Applied Micro Scoops Up JNI, Moves into Storage

Applied Micro Circuits moved into the storage networking space last week with the acquisition of host bus adapter firm JNI Corp.

While Emulex and QLogic dominate the
HBA space
, for AMCC the acquisition is a chance to expand into a faster-growing market than communications chips.

“This acquisition significantly extends AMCC’s networking silicon technology expertise beyond the Wide Area Network into the high-growth SAN market,” AMCC CEO Dave Rickey said in a statement.

“Driven by new broadband applications and the resulting need for a secure, reliable, and scalable storage network, Fibre Channel technology has experienced mass market acceptance,” Rickey continued. “JNI is positioned well in this growing market with an extensive, easy-to-use product line for both Solaris and Windows.”

Under the terms of the agreement, AMCC will pay $7 per share in cash for each outstanding share of JNIC common stock, or about $190 million, and will assume all outstanding JNI employee stock options. As of June 30, JNI’s assets included approximately $90 million in cash and investments. The acquisition has been approved by the boards of directors of each company but is subject to the approval of stockholders of JNI and other customary closing conditions and regulatory approvals, the companies reported. The acquisition is expected to close in the fourth quarter.

JNI CEO Russell Stern believes the merger provides synergies to boost JNI’s market share. “AMCC brings state-of-the-art silicon infrastructure, including physical layer and multi-processor design expertise, which is highly leveraged in host bus adapters…Combining with AMCC will drive greater value for our customers and enable us to leverage valuable intellectual property.”

With more than $1 billion in cash on hand as of June 30, AMCC suggested on a conference call concerning the merger that it may not be finished making acquisitions in the storage space.

“AMCC would not have ambitions in such a space and then stop with the acquisition of JNI,” Rickey stated during the call. “You will see more headcount in AMCC and SAN in two years than you will after the JNI acquisition. Whether that comes from acquisitions, hiring, or redeployment of people from carrier-centric businesses is our option.”

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