Irvine chipmaker Broadcom Corp. came out early with first-quarter results Tuesday and a $764 million acquisition bid for Costa Mesa’s Emulex Corp. that’s set to have big reverberations in the county’s technology industry.
Broadcom made an unsolicited bid for Emulex, which makes electronics for data storage networks.
A deal would boost Broadcom in the market for chips and circuit boards that link computers serving up data for corporations, banks and others.
There was no early response from Emulex.
Broadcom went public with its offer for Emulex after approaching the company in December with a deal that was rebuffed.
In a letter to Emulex’s board, Broadcom Chief Executive Scott McGregor said the chipmaker was disappointed when Emulex said it wasn’t for sale “and abruptly cut off the possibility of further discussions.”
According to Broadcom, Emulex then strengthened its anti-takeover provisions to thwart a buyout.
Broadcom’s offer is 40% higher than what Emulex closed at on Monday.
Separately, Broadcom reported a first-quarter loss of $91.9 million, versus a profit of $74.3 million a year earlier.
The loss was less than the $111.3 million analysts expected on average.
Sales came in at $853.4 million, 24% lower than the fourth quarter and 17% lower than a year earlier, but ahead of the $848.4 million analysts had expected on average.
On a conference call with analysts, Broadcom forecast second-quarter sales of $937.5 million, more than the $862 million analysts had been expecting.
Orders improved in late March, signaling a sequential increase in revenue for the current quarter, according to Broadcom.
In a change of course, Broadcom said late Monday it planned to report results as the market opened Tuesday, rather than after the close as it usually does.
That prompted questions as to why Broadcom was coming out early, which the company answered with the Emulex offer.
A Broadcom buy of Emulex would reorder the local ranks of technology companies.
It would put Broadcom in direct competition with Aliso Viejo-based QLogic Corp., which spun off from Emulex in 1994.
Emulex and QLogic dominate the market for what are known as host bus adapters, profitable electronics that link computers serving up data on a network.
Broadcom’s bid likely is driven by an emerging market for Emulex and QLogic: chips and circuit boards that bridge faster, specialized data networks with cheaper, everyday networks of servers and desktop computers.
QLogic and Emulex are angling for early design wins for the technology, known as fibre channel over Ethernet. The technology is expected to start taking hold in the next few years.
“It’s a horse race,” said Kaushik Roy, senior analyst of data storage technologies at Wedbush Morgan Securities Inc. in San Francisco.
Broadcom makes chips for networks, consumer electronics, wireless phones and desktop computers.
An Emulex buy would build on the company’s business making chips for servers, routers and other networking gear.
As usually is the case for potential acquirers, Broadcom’s shares fell nearly 6% at close of trading on the acquisition news. It had a recent market value of $10 billion.
Emulex’s shares jumped more than 47% at end of trading to match Broadcom’s premium on a market value of about $800 million.
The company has struggled in its long-running rivalry with QLogic for host bus adapters, with QLogic holding the market lead for some time.
Emulex’s shares are off by about 60% in the past year, before Broadcom’s offer became public.
QLogic’s shares are off about 30% in the same time. Its shares also got a boost Tuesday on Broadcom’s Emulex offer. They were up nearly 20% at close of trading on a market value of $1.7 billion on speculation it too could be a takeover target.
