There’s been some buzz that Broadcom Corp., an Irvine-based maker of communications chips, could look to snatch up some businesses left dangling by competitors.
Broadcom could possibly buy a division of Freescale Semiconductor Inc.’s wireless unit that makes baseband chips, the “brains” of a cell phone, according to one analyst.
“I’m hypothesizing that Broadcom might want to buy it, simply for the fact that it would make sense,” said Dan Berenbaum, an analyst at Cowen & Co. in New York. “Broadcom lacks scale in its wireless business.”
Austin, Texas-based Freescale, the former chip arm of Motorola Inc., has seen its business decline as Motorola’s phones lose market share to flashier models by Samsung Group and others.
“People have been talking about what Freescale is going to do with that business for a long time,” Berenbaum said. “Broadcom could potentially do a deal in cash, which could be very accretive.”
As of Sept. 30, Broadcom had $2.2 billion in cash and investments on hand.
The company also is on the short list of suitors for Texas Instruments Inc.’s business making modem chips sold in stores for cell phones.
TI recently said it is moving to cut some $200 million a year in expenses in its wireless business and that it’s in talks with potential buyers, which may include Broadcom.
Dallas-based TI lost business when one of its top customers, Nokia Corp., opted to buy chips from Broadcom last year.
Quest CEO
A change at the top could be a good thing for Aliso Viejo-based business software maker Quest Software Inc., according to one analyst.
Last month, longtime chief Vincent “Vinny” Smith stepped aside to make way for Doug Garn, who’s set to be the chief executive at the maker of business software.
Smith held the post for more than a decade and is set to continue on as chairman.
Garn, who joined Quest 11 years ago, was named president in 2005. Before that, he was the company’s vice president of worldwide sales.
“Garn has a reputation as a results-oriented executive and we expect him to focus on company margin expansion and shareholder returns, not just revenue growth,” Richard Sherman, an analyst at Greenwich, Conn.-based MKM Partners LLC said in a research note.
As chief, Smith had the reputation as a voracious acquirer,he was constantly on the hunt for deals. The company’s bought nearly a dozen smaller players in the past few years.
The most recent was the September buy of Phoenix-based NetPro Computing Inc. for $78 million in cash.
Smith once said “it’s fun to go and spend $100 million a year” buying companies.
It’s a view that wasn’t always looked on favorably by investors, who’d rather not see the company’s earnings per share diluted by so many deals.
“We appreciate that Quest’s business model requires it to be in constant motion to stay ahead of competitors Microsoft Corp. and Oracle Corp.,” Sherman said. But “we think a more disciplined approach to investments is needed.”
After the executive change, Sherman raised his rating on the stock to “buy” from “neutral.”
Putting Garn in Smith’s shoes also gets around a fading but still unsettled issue,that Smith still could see fallout from the government’s probe into stock options backdating at Quest.
Earlier this year, a few Quest employees including Smith received word,known as a Wells notice,that the Securities and Exchange Commission plans to sue the company for possible violation of securities laws relating to misdated stock options.
“With the Wells notice still overhanging Vinny Smith, we think it is a prudent decision to make the CEO transition in a deliberate, orchestrated fashion and eliminate a potential disruption if the Wells notice were to turn south,” Sherman said.
The SEC hasn’t taken any further action so far.
Epicor Director
Irvine business software maker Epicor Software Corp. said it appointed a director to its board, which for the past few weeks has been fielding a hostile buyout offer by New York-based hedge fund Elliott Associates LP.
Elliott offered $566 million for Epicor on Oct. 1. Epicor’s board twice rejected the unsolicited bid, including in a detailed statement last week.
Elliott still could take the offer directly to shareholders in an effort to go around Epicor’s board.
The company appointed James Richardson to its board, which now has six members.
Richardson, 60, has more than 25 years in executive and financial positions and technology companies.
He held posts at Portland, Ore.-based WebTrends Inc. and Network General Corp., where he helped steer its $1.2 billion buyout by McAffee Inc.
He’s also worked at Advanced Logic Research Inc., a Lake Forest business computer maker that was bought by Gateway Inc. in the late 1990s.
