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IRVINE, Calif. and ANDOVER, Mass., Jan 23, 2006 -- Broadcom Corporation (Nasdaq: BRCM), a global leader in wired and wireless broadband communications semiconductors, today announced that it has signed a definitive agreement to acquire Sandburst Corporation, a privately-held fabless semiconductor company specializing in the design and development of scalable packet switching and routing systems-on-a-chip (SoCs) that are deployed in enterprise core and metropolitan Ethernet networks. Sandburst provides a complete switching and routing solution, which includes a packet processor, traffic management capabilities and switch fabric. Sandburst's technology is shipping today in advanced carrier-class switching solutions that drive converged real-time voice, video and data communications services across the Internet.
According to International Data Corporation's "Worldwide Metro Ethernet Equipment 2005-2009 Forecast and Analysis," the metropolitan Ethernet equipment market represents one of the largest growth segments in Ethernet switching and is expected to grow at a 26% compounded annual growth rate through 2009 reaching $5.5 billion. Service providers are adopting Ethernet technology in their metro networks because of its superior performance and cost-effectiveness. Carrier-class Ethernet can meet the new requirements for higher bandwidth connectivity, real-time video, IP television services and toll-quality voice over metro networks.
"By acquiring Sandburst, Broadcom is poised to accelerate the convergence of triple-play traffic in service provider networks," said Ford Tamer, Senior Vice President and General Manager of Broadcom's Networking Infrastructure Group. "Furthermore, we will be well positioned to catch the next wave of the burgeoning Metro Ethernet market."
"Sandburst has an impressive customer base and a world-class design team that is well-respected in the industry," said Martin Lund, Vice President and General Manager of Broadcom's Network Switching Business Unit. "By combining our industry-leading StrataXGS® III Ethernet switch silicon solutions with Sandburst's innovative technology and engineering talent, Broadcom will be able to offer a complete portfolio of end-to-end Ethernet switch solutions."
Ethernet is quickly becoming ubiquitous because it provides a cost-effective, scalable technology foundation for delivering triple-play content such as Internet Protocol Television (IPTV), voice over IP and high-speed data. However, the new networks that carry this traffic must support significantly enhanced quality of service (QoS) characteristics.
"With its industry-leading position in Ethernet switching, Broadcom offers an ideal complement to Sandburst's HiBeam™ product family," said Vince Graziani, President and CEO of Sandburst. "We look forward to joining the Broadcom team and to the opportunity to further extend Broadcom's leadership position in Ethernet switching from the SOHO, SMB and enterprise markets to the enterprise core and metro Ethernet."
Sandburst designs and develops switching solutions that target the high-end carrier-class chassis market. At the heart of its products is a state-of-the-art traffic management solution that allows per-end-user service-level guarantees. Traffic management enables the quality of service that is essential for packet-based triple-play communications over metro Ethernet networks. Specifically, Sandburst's solution offers per-subscriber QoS, which ensures service integrity to hundreds of thousands of subscribers simultaneously regardless of the traffic load. Switches and routers utilizing the Sandburst solution enable service providers to successfully deploy a rich suite of subscriber services across the Ethernet infrastructure.
At closing of the acquisition, Broadcom expects to pay approximately $80 million -- $75 million in cash in exchange for all outstanding shares of capital stock and vested stock options of Sandburst and up to 100,000 shares of Class A common stock reserved for future issuance in exchange for unvested employee stock options of Sandburst, which will be assumed by Broadcom and subject to vesting requirements. A portion of the cash consideration payable to the shareholders will be placed into escrow pursuant to the terms of the acquisition agreement. The boards of directors of each of the companies and the stockholders of Sandburst have approved the merger. The closing, which is expected to occur during Broadcom's first fiscal quarter ending March 31, 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 its first fiscal quarter. The amount of that charge, if any, has not yet been determined.
About Sandburst
Sandburst is a fabless semiconductor company delivering adaptive silicon to power advanced Ethernet and IP switches. Sandburst's HiBeam™ chipset provides its system vendor clients with a complete packet switching data path for Enterprise and Service Provider applications. A privately-held company, Sandburst is financed by leading venture capital investors. Sandburst services the worldwide networking market from its headquarters in Andover, MA.
About Broadcom
Broadcom Corporation is a global leader in wired and wireless broadband communications semiconductors. Our products enable the convergence of high-speed data, high definition video, voice and audio at home, in the office and on the go. Broadcom provides manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices with the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions. These solutions support our core mission: Connecting everything®.
Broadcom is one of the world's largest fabless semiconductor companies, with annual revenue of more than $2 billion. The company is headquartered in Irvine, Calif., with offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at 1-949-450-8700 or at http://www.broadcom.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward- looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
Important factors that may cause such a difference for Broadcom in connection with the acquisition of Sandburst Corporation 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 rate at which our present and future customers and end-users adopt Broadcom's and Sandburst's technologies and products in the markets for high- speed networking applications; delays in the adoption and acceptance of industry standards in those markets; 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; intellectual property disputes and customer indemnification claims and other types of litigation risk; the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory; 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; our ability to timely and accurately predict market requirements and evolving industry standards and to identify opportunities in new markets; 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; the gain or loss of a key customer, design win or order; 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 and assembly 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 effects of new and emerging technologies; problems or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration; the quality of our products and any remediation costs; the effectiveness of our expense and product cost control and reduction efforts; the risks and uncertainties associated with our international operations, particularly in light of recent events; 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.
Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release speak only as of this date. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
Broadcom®, the pulse logo, Connecting everything®, the Connecting everything logo and StrataXGS® are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Sandburst® and HiBeam™ are trademarks of Sandburst Corporation. Any other trademarks or trade names mentioned are the property of their respective owners.
Broadcom Trade Press Contact
Gennis Lafayette
Public Relations Manager
408-543-3413
gennisl@broadcom.com
Broadcom Investor Relations Contact
T. Peter Andrew
Vice President, Investor Relations
949-926-5663
andrewtp@broadcom.com
Broadcom Business Press Contact
Bill Blanning
Vice President, Public Relations
949-926-5555
blanning@broadcom.com
SOURCE Broadcom Corporation
Trade Press: Gennis Lafayette, Public Relations Manager, +1-408-543-3413, gennisl@broadcom.com; or Investor Relations: T. Peter Andrew, Vice President, Investor Relations, +1-949-926-5663, andrewtp@broadcom.com, or Business Press: Bill Blanning, Vice President, Public Relations, +1-949-926-5555, blanning@broadcom.com, all of Broadcom Corporation
