Broadcom to Acquire Octalica, Inc. for Technologies Enabling Advanced Home Networking Over Coaxial Cable Infrastructures
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Press release date: May 3, 2007
Purchase Accelerates Time to Integration of Multimedia Over Coaxial Cable Capabilities in Next Generation Broadcom® Set-Top Box and Broadband Access Products
IRVINE, Calif. and NEWTON CENTRE, Mass., May 3 -- Broadcom Corporation (NASDAQ:BRCM), a global leader in semiconductors for wired and wireless communications, today announced that it has signed a definitive agreement to acquire Octalica, Inc. Octalica is a privately-held fabless semiconductor company that specializes in the design and development of networking technologies based on the MoCA(TM) (Multimedia over Coax Alliance) standard, which enables distribution of high quality digital multimedia content throughout the home over existing coaxial cable. MoCA has emerged as a popular method for in-home multimedia distribution among cable, satellite and telecommunications service providers in the U.S., making Octalica's product portfolio a strong complement to Broadcom's industry leading set-top box and broadband access technologies.
More than 70% of homes in the U.S. have coaxial cable already installed into the home and many homeowners use cable as their primary network for entertainment, video, data and information services, making it ideal for deploying next generation networking services enabled by MoCA technology. With the increasing prevalence of digital content in the home (such as high definition (HD) video, personal video recording, the emergence of televisions capable of HD content playback, the growth in downloadable video and audio, and the pervasive use of digital photography) consumers want to experience and interact with this information at any time and in virtually any location within their homes. MoCA technology allows homeowners to utilize their existing coaxial infrastructure as networking systems to take advantage of these new applications and functionality throughout their homes.
With the adoption of MoCA as a key networking technology by most of the leading U.S. service providers, demand for the technology is expected to increase significantly, with makers of set-top box and broadband access products seeking to integrate MoCA functionality in a cost-effective and timely manner. Octalica's MoCA technologies will enable Broadcom to derive significant time to market advantages in the development of MoCA solutions for the in-home networking of multimedia content over coax.
With this acquisition, Broadcom is adding MoCA to the multiple other technologies it offers to address end users' connectivity needs worldwide for the distribution of digital content throughout the home, supplementing its industry leading Wi-Fi®, Ethernet, and Bluetooth® products, among others.
"MoCA is a key technology that has gained significant traction with our OEM customers and the major cable, satellite and telecommunications service providers in the U.S., who have shown a clear preference for in-home coax networking," said Dan Marotta, Senior Vice President and General Manager of Broadcom's Broadband Communications Group. "With Octalica's existing technologies and strong engineering team, Broadcom's ability to integrate MoCA solutions into our product roadmap will be further enhanced."
Broadcom is a leading supplier of state-of-the-art system-on-a-chip and software solutions for various broadband and home networking markets, including digital cable and satellite set-top boxes, DSL, digital television and Wi-Fi, among others. The vision of distributed digital multimedia content being shared among multiple rooms and devices within the household is rapidly becoming a reality, with the cable, satellite and telecommunications industries increasingly offering these services. While Wi-Fi is commonly seen as a powerful, wireless solution for in-home entertainment networking, MoCA will serve as a complementary wire line networking technology required by U.S. services providers to ensure the reliable delivery of next generation voice, video and data services in the home.
"Broadcom's strong position in the set-top box, broadband access and other home digital multimedia market segments makes it an ideal partner for Octalica, making our MoCA technologies available to an existing customer base that is already looking for these solutions," said Moti Kintzlinger, CEO of Octalica, Inc. "Along with our Co-founder Avi Klinger and our entire team, we look forward to joining Broadcom to help drive the next evolution of networking in the digital home."
Octalica, Inc. is headquartered in Newton Centre, Massachusetts, with a highly experienced design team in Tel Aviv, Israel, with the company consisting of 27 employees overall.
In connection with the acquisition, Broadcom expects to pay approximately $31 million in cash in exchange for all of the outstanding shares of Octalica's capital stock and other rights of Octalica. A portion of the consideration payable to the stockholders of Octalica will be placed into escrow pursuant to the terms of the acquisition agreement. The boards of directors of both companies have approved the merger. The closing, which is expected to occur during Broadcom's second quarter ending June 30, remains subject to customary closing conditions. Broadcom may record a one-time charge for purchased in-process research and development expenses related to the acquisition in the second quarter. The amount of that charge, if any, has not yet been determined.
Octalica develops leading-edge digital home entertainment networking products that allow consumers to enjoy an IP-based, high definition TV experience throughout the home. Its first entry into this emerging market is a solution, both H/W and S/W, which utilizes the existing coaxial infrastructure in the home adhering to MoCA (Multimedia over Coax Alliance) specifications. The Octalica team has world-class competencies in the design and implementation of complex, cost effective System-on-a-Chip (SoC) products, focused on coax infrastructure and also including expertise in xDSL and Wi-Fi technologies.
About Broadcom's Broadband Communications Group
Broadcom offers manufacturers a range of broadband communications and consumer electronics SoC's that enable voice, video and data services over residential wired and wireless networks. These highly integrated silicon solutions continue to enable the most advanced system solutions on the market, which include digital cable, satellite and IP set-top boxes and media servers, broadband modems and residential gateways, high definition and digital televisions, HD DVD and Blu-ray(TM) disc players, DVD recorders and personal video recorders.
Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry's broadest portfolio of state-of-the-art, system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything®.
Broadcom is one of the world's largest fabless semiconductor companies, with 2006 revenue of $3.67 billion, and holds 2,000 U.S. and over 800 foreign patents, more than 6,000 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video and data.
Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5900 or at www.broadcom.com.
Important factors that may cause such a difference for Broadcom in connection with the acquisition of Octalica, Inc. include, but are not limited to, the risks inherent in acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, costs and unanticipated expenditures, changing relationships with customers, suppliers and strategic partners, potential contractual, intellectual property or employment issues, accounting treatment and charges, and the risk that anticipated benefits of the acquisition may not be realized; general economic and political conditions and specific conditions in the markets we address, including the volatility in the technology sector and semiconductor industry, trends in the broadband communications markets in various geographic regions, including seasonality in sales of consumer products into which our products are incorporated, and possible disruption in commercial activities related to terrorist activity or armed conflict in the United States and other locations; the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory; the gain or loss of a key customer, design win or order; the rate at which our present and future customers and end-users adopt Broadcom's technologies and products in the markets for networking applications; our ability to scale our operations in response to changes in demand for our existing products and services or demand for new products requested by our customers; our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a cost-effective and timely manner; intellectual property disputes and customer indemnification claims and other types of litigation risk; the quality of our products and any remediation costs; our ability to timely and accurately predict market requirements and evolving industry standards and to identify opportunities in new markets; problems or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration; delays in the adoption and acceptance of industry standards in networking markets; our ability to retain, recruit and hire key executives, technical personnel and other employees in the positions and numbers, with the experience and capabilities, and at the compensation levels needed to implement our business and product plans; the risks and uncertainties associated with our international operations, particularly in light of recent events; competitive pressures and other factors such as the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; the timing of customer-industry qualification and certification of our products and the risks of non-qualification or non-certification; changes in our product or customer mix; the volume of our product sales and pricing concessions on volume sales; the availability and pricing of third party semiconductor foundry, assembly and test capacity and raw materials; fluctuations in the manufacturing yields of our third party semiconductor foundries and other problems or delays in the fabrication, assembly, testing or delivery of our products; the risks of producing products with new suppliers and at new fabrication and assembly facilities; the effectiveness of our expense and product cost control and reduction efforts; the effects of natural disasters, public health emergencies, international conflicts and other events beyond our control; the level of orders received that can be shipped in a fiscal quarter; and other factors. CONTACT: Business Press Contact, Laura Brandlin, Senior Director, Marketing Communications, +1-949-926-5108, firstname.lastname@example.org,
Investor Relations, T. Peter Andrew, Vice President, Corporate Communications, +1-949-926-5663, email@example.com, both of Broadcom Corporation
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