Broadcom bids $130 billion to acquire Qualcomm

In what could become the largest tech merger to date, Broadcom announced a proposal to acquire all of the outstanding shares of Qualcomm for $70.00 per share in cash and stock, making the offer worth $130 billion in total, a 28% premium over the closing price of Qualcomm common stock on November 2, 2017

Broadcom cites the following benefits of a merged company:

• Creates a Leading Diversified Communications Semiconductor Company: Qualcomm's cellular business is highly complementary to Broadcom's portfolio, and the combination will create a strong, global company with an impressive portfolio of technologies and products.
• Accelerates Innovation to Deliver More Advanced Semiconductor Solutions to Global Customers: As a result of enhanced scale, reach and financial flexibility, the combined company will benefit from the ability to accelerate innovation and deliver more advanced semiconductor solutions to its broad global customer base.
• Compelling Financial Benefits: The combined company will have an enhanced financial profile, benefiting from Broadcom's proven operating model with industry-leading margins. The combined Broadcom and Qualcomm, including NXP, will have pro forma fiscal 2017 revenues of approximately $51 billion and pro forma 2017 EBITDA of approximately $23 billion, including synergies. The transaction is expected to be accretive to Broadcom's Non-GAAP EPS in the first full year after close.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies. Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company," said Hock Tan, President and Chief Executive Officer of Broadcom. "This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination. With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value."

Some other notes about the offer:

1. Hock Tan, Broadcom's CEO, discussed a merger with Qualcomm's CEO, Steve Mollenkopf, as early as August 2016. Broadcom's stock has appreciated 55% since that time.
2. The offer stands whether or not Qualcomm consummates its acquisition of NXP
3. Broadcom is confident it will be able to arrange the necessary debt financing for the deal
4. Broadcom is confident it will receive all necessary regulatory approvals.

Qualcomm to Acquire NXP -- Engines for the Connected World

Thursday, October 27, 2016  Mergers And Acquisitions, Netherlands, NXP, Qualcomm, Silicon  No Comments

Qualcomm agreed to acquire all of the issued and outstanding shares of NXP for $110.00 per share in cash, representing a total enterprise value of approximately $47 billion. The deal will be financed through cash on hand and $11 billion in new debt. The companies expect total annualized synergies of $500 million within two years of close.

NXP Semiconductors N.V., which headquartered in Eindhoven, Netherlands, employs approximately 45,000 people in more than 35 countries and is known for its mixed-signal semiconductor electronics. The company was known as Philips Semiconductor prior to 2006.

Key markets include automotive, broad-based microcontrollers, secure identification, network processing and RF power. NXP has a broad customer base, serving more than 25,000 customers through its direct sales channel and global network of distribution channel partners.

For Q3 2016, NXP reported revenue of $2.469 billion, up 4.4% over a year ago, and GAAP gross profit of $1.184 billion, up 7.7% over a year ago.

The combined company is expected to have annual revenues of more than $30 billion, serviceable addressable markets of $138 billion in 2020 and leadership positions across mobile, automotive, IoT, security, RF and networking.

"With innovation and invention at our core, Qualcomm has played a critical role in driving the evolution of the mobile industry. The NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities, where we will be well positioned to lead by delivering integrated semiconductor solutions at scale," said Steve Mollenkopf, CEO of Qualcomm Incorporated. "By joining Qualcomm's leading SoC capabilities and technology roadmap with NXP's leading industry sales channels and positions in automotive, security and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world."

Qualcomm also noted that the acquisition is a tax efficient use of its offshore cash.

http://investors.nxp.com/
http://www.qualcomm

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AWS launches its next-gen compute optimized instances

Amazon Web Services announced the availability of C5 instances, its next generation of compute-optimized instances for Amazon Elastic Compute Cloud (Amazon EC2). The C5 instances feature 3.0 GHz Intel Xeon Scalable processors (Skylake-SP) up to 72 vCPUs, and 144 GiB of memory—twice the vCPUs and memory of previous generation C4 instances. The new C5s are aimed at compute-heavy applications like batch processing, distributed analytics, high-performance computing (HPC), ad serving, highly scalable multiplayer gaming, and video encoding.

The C5 instances also introduce a number of unique features:

• networking is provided through an Elastic Network Adapter (ENA), a scalable network interface built by AWS to provide direct access to its networking hardware. 
• additional dedicated hardware and network bandwidth for Amazon Elastic Block Store (Amazon EBS) enables C5 instances to offer high-performance storage through the scalable NVM Express (NVMe) interface. 
• a new, lightweight hypervisor allows applications to use practically all of the compute and memory resources of a server, delivering reduced cost and even better performance. 

AWS is offering C5 instances in six sizes—with the four smallest instance sizes offering substantially more Amazon EBS and network bandwidth than the previous generation of compute-optimized instances.

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Intel partners with AMD on Embedded Multi-Die Interconnect Bridge for GPUs

Intel announced a partnership with AMD to tie together its high-performance processors with discrete graphics processors using the Intel Embedded Multi-Die Interconnect Bridge (EMIB) technology along with a new power-sharing framework.
The goal is to reduce the usual silicon footprint to less than half that of standard discrete components on a motherboard.

The first implementation matches the new 8th Gen Intel Core Core H-series processor, second generation High Bandwidth Memory (HBM2) and a custom-to-Intel third-party discrete graphics chip from AMD’s Radeon Technologies Group – all in a single processor package.

“Our collaboration with Intel expands the installed base for AMD Radeon GPUs and brings to market a differentiated solution for high-performance graphics,” said Scott Herkelman, vice president and general manager, AMD Radeon Technologies Group. “Together we are offering gamers and content creators the opportunity to have a thinner-and-lighter PC capable of delivering discrete performance-tier graphics experiences in AAA games and content creation applications. This new semi-custom GPU puts the performance and capabilities of Radeon graphics into the hands of an expanded set of enthusiasts who want the best visual experience possible.”

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Seaborn and IOX Cable plot subsea route between U.S. and India via South Atlantic

Seaborn Networks and IOX Cable Ltd unveiled plans for the first next-generation subsea fiber optic route between the U.S and India that will interconnect in South Africa and Brazil.

This unique route via the South Atlantic and Indian Oceans will connect the U.S. with three BRICS countries and Mauritius, providing fewer hops through fewer countries than existing alternative routes.

Seaborn recently activated its Seabras-1 direct subsea system between New York and São Paulo. It is planning a new direct subsea system between Brazil - Argentina (RFS Q4 2018); and SABR, a new subsea system between Cape Town, South Africa and Seabras-1 (RFS 2019). 

IOX is the developer of the IOX Cable System ("IOX System"), the first next-generation subsea network interconnecting South Africa, Mauritius and India (RFS 2019). IOX have commenced work for the cable route survey, and once completed will provide a direct route between South Africa and India via Mauritius.  Seaborn's SABR and the IOX System will interconnect in South Africa.

The Seabras-1 + SABR + IOX System route will be available exclusively through Seaborn and IOX.

"We are extremely pleased to work with IOX to provide this unique and highly secure route," said Larry Schwartz, Chairman & CEO of Seaborn. "This alliance will reshape the global communications landscape for the Southern Hemisphere."

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Stonepeak to acquire majority stake in euNetworks

Stonepeak Infrastructure Partners, a private equity firm based in New York, will acquire a majority interest in euNetworks. Existing euNetworks investors, including Columbia Capital and Greenspring Associates, will continue to hold a material interest in the company. The purchase price was not disclosed.
Under the deal, Stonepeak will also provide euNetworks with up to $500 million of committed growth capital for both organic and inorganic development.

Brady Rafuse will remain the Chief Executive Officer of the company and the existing euNetworks investors will continue to hold a material interest in the company’s new capital structure.

euNetworks owns and operates dense fibre-based metropolitan networks in 14 cites, connected by an intercity backbone covering 49 cities in 15 countries. These networks directly connect into over 300 data centres and more than 1,300 further cell towers, cable landing stations and enterprise buildings.

Stonepeak Infrastructure Partners currently manages approximately $11.3 billion of capital for its investors.

“I am thrilled that Stonepeak is becoming an investor in euNetworks,” said Brady Rafuse, Chief Executive Officer of euNetworks. “This agreement offers Stonepeak the platform to enter the bandwidth market, and it provides euNetworks with a fantastic opportunity to accelerate growth and deliver more for our customers. We have demonstrated our ability to remain focused on what we do well, while investing in and developing our network footprint. But we’ve seen the nature of the opportunity continue to grow exponentially and see Stonepeak as the right partner for the next phase of our growth. We are genuinely excited at what this transaction and partnership offers our customers, our people and our existing investors.”

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Mellanox intros Innova-2 FPGA-based adapter

Mellanox Technologies introduced its Innova-2 product family of FPGA-based smart network adapters for range of applications including security, cloud, Big Data, deep learning, NFV and high-performance computing.

The Innova-2 adapters will be offered in multiple configurations, either open for customers’ specific applications or pre-programmed for security applications with encryption acceleration such as IPsec, TLS/SSL and more. The Innova-2 family of dual-port Ethernet and InfiniBand network adapters supports network speeds of 10, 25, 40, 50 and 100Gb/s, while the PCIe Gen4 and OpenCAPI (Coherent Accelerator Processor Interface) host connections offer low-latency and high-bandwidth.

Mellanox said this new line of Innova-2 adapters delivers 6X higher performance while reducing total cost of ownership by 10X when compared to alternative options. The new products combine the company's ConnectX-5 25/40/50/100Gb/s Ethernet and InfiniBand network adapters with a Xilinx UltraScale™ FPGA accelerator.

“The Innova-2 product line brings new levels of acceleration to Mellanox intelligent interconnect solutions,” said Gilad Shainer vice president of Marketing, Mellanox Technologies. “We are pleased to equip our customers with new capabilities to develop their own innovative ideas, whether related to security, big-data analytics, deep learning training and inferencing, cloud and other applications. The solution allows our customers to achieve unprecedented performance and flexibility for the most demanding market needs.”

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Zayo posts $643.5 million of consolidated revenue, up 3% annually

Zayo reported $643.5 million of consolidated revenue for the first quarter of its fiscal 2018, including $515.8 million from the Communications Infrastructure segments and $127.7 million from the Allstream segment. Net income amounted to $23.2 million, including $11.5 million from the Communications Infrastructure segments and $11.7 million from the Allstream segment.

Some highlights:

• As of September 30, 2017, the Company had $291.2 million of cash and $442.2 million available under its revolving credit facility.
• Business at its Allstream unit continues to decline.
• Fiber Solutions, Colocation fundamentals are strong; Transport, and Enterprise Networks lagging.
• In Enterprise services, Ethernet is performing well, driven by connectivity between data centers and into cloud environments. Managed WAN is mixed, as legacy ELI and Allstream customers experiencing higher churn because of off-net & legacy MPLS.
• Zayo continues to evaluate a potential conversion to an REIT structure.
• The company is lowering its Dec17q EBITDA guidance.

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Symantec acquires SurfEasy for personal VPN

Symantec has acquired SurfEasy, a leading Virtual Private Network (VPN) provider, from Opera Software, its parent company. Financial terms were not disclosed.

SurfEasy's personal VPN ensures online privacy and security on smartphones, tablets and computers. SurfEasy has been an existing OEM technology provider to Symantec, powering Symantec’s Norton WiFi Privacy product with VPN technology.

SurfEasy will become part of Symantec’s Consumer Business Unit, which includes the Norton and LifeLock brands, bringing VPN to the portfolio of Consumer Digital Safety solutions.

“SurfEasy has been a great partner to Symantec and we look forward to bringing their expertise and leading technology inside the company,” said Greg Clark, Symantec CEO. “The addition of SurfEasy to our Consumer business will benefit our customers as we continue to strengthen our Norton WiFi Privacy solution so consumers can use public Wi-Fi without fear of exposing their information to cyber criminals.”

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NeoPhotonics' Q3 revenue drops to $71 million

NeoPhotonics reported Q3 revenue of $71.1 million, in comparison to $73.2 million in the prior quarter, and down from $103.3 million in the same period last year. Gross margin was 14.8%, compared to 22.9% in the prior quarter. There was a net loss of$18.2 million, compared to a net loss of $9.3 million in the prior quarter.

We are focused on growth initiatives in telecom, data center and cloud markets, as well as operational execution to lower our breakeven level as China continues with steady though muted demand,” said Tim Jenks, Chairman and CEO of NeoPhotonics. “Growth drivers in our markets include Metro deployments across the globe, China high speed build-outs in advance of 5G wireless, and data centers and big data applications that are embracing our higher speed technologies and leverage NeoPhotonics’ core strengths,” concluded Mr. Jenks.

• In October 2017, citing uncertainty in demand from China, NeoPhotonic announced a set of restructuring actions, including a reduction in force, real estate consolidation, a write-down of inventory for certain programs and assets and a write-down of idle assets. NeoPhotonics also trimmed its financial outlook for the third quarter of 2017, saying revenue is now expected to be in the range of $69 to $71 million, with GAAP gross margin of approximately 10% to 13% and GAAP loss per share of $0.50 to $0.40, inclusive of restructuring charges. Previously, the company had stated revenue expectations for the third quarter of 2017 to be $70 to $76 million, GAAP gross margin of 23% to 26%, and GAAP net loss per share of $0.21 to $0.11 and non-GAAP gross margin of 24% to 27%.

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