Irvine-based chipmaker Broadcom Corp. garnered plenty of headlines for its $3.7 billion cash bid for Santa Clara-based NetLogic Microsystems Inc. earlier this month.
A significant aspect of the deal went largely overlooked.
Broadcom’s largest acquisition to date—which has been approved by both companies’ boards and is expected to close in the first half of 2012—will bring about 700 patents to complement an already-deep portfolio that brings in tens of millions in licensing fees annually.
Broadcom Chief Executive Scott McGregor highlighted the patents during a conference call with investors and analysts. That part of his remarks barely registered in initial reports of the deal for NetLogic.
“That’s one patent per employee, an impressive feat,” he said earlier this month.
Patent licensing is one the biggest technology trends right now, as companies look to cash in on their research and development legacies.
In 2010, the Institute of Electrical and Electronics Engineers gave Broadcom’s patent portfolio the top ranking among fabless chipmakers.
“NetLogic Microsystem’s assets will only strengthen that position,” McGregor said.
Broadcom’s intellectual property portfolio has some 15,000 U.S. and international patents and pending applications.
That comes to about 1.5 patents per Broadcom’s 10,000 employees.
Getting a good read on how much revenue that generates for Broadcom annually is a challenge since the company doesn’t give a breakdown in its earnings reports.
We do know it was awarded more than 800 patents last year, about a third of all patents awarded in the county, according to data from the United States Patent and Trademark Office in Washington, D.C.
Latest on Lantronix
Irvine-based networking gear maker Lantronix Inc. is moving to put its focus firmly on business operations after a prolonged battle between management and its board of directors.
Lantronix makes small electronic devices that allow vending machines, thermostats, retail terminals, ATMs and other machines to be accessed via the Internet or other computers.
Competitors include IBM Corp., Hewlett-Packard Co., Dell Inc. and Cisco Systems Inc.
Clearing the decks and getting back to business under new Chief Executive Kurt Busch—hired last month from Newport Beach-based networking chipmaker Mindspeed Technologies Inc.—will cost about $3.3 million for investigations into prior management and severances.
The turmoil hit a boiling point in May when former chief executive Jerry Chase and financial chief Reagan Sakai resigned over complaints raised by the company’s largest shareholder, Bernhard Bruscha, also a Lantronix director and cofounder.
Bruscha’s TL Investment GMBH, based in Germany, owns 38% of Lantronix.
The complaints led to an internal investigation that found improper use of travel expenses and stock options, as well as misleading statements made during conference calls with investors and analysts, according to the company.
Chase, in a resignation letter, said he disagreed with the findings and called the probe “flawed and unfair.”
The resignations led to an executive shake-up. Larry Sanders, a former chairman, took the helm on an interim basis.
Lantronix’s second-quarter earnings report shed some light on the cost of the dust-up. It included a $2.1 million charge related to the investigation, and said another $250,000 is expected for the current quarter.
The company also said it took an $862,000 hit in the June quarter as a result of the separation agreements with Chase and Sakai.
It expects another $150,000 in expenses in the current quarter related to consulting services per the separation agreements.
Lantronix now is focused on increasing margins, decreasing inventory and building its work force, according to Busch.
“With the pain and expenses from last year’s events largely behind us, we are looking toward a future of opportunities for Lantronix in the growing (machine-to-machine) space,” he said. “The board and our management team are focused and aligned on our priorities.”
Lantronix reported revenue of $12 million in the June quarter, up 2% from a year earlier.
It reported a net loss of $433,000, compared to a profit of $169,000 a year ago.
Microsemi Extends Reach
Microsemi Corp. has inked a deal with a unit of Phoenix-based electronics distributor Avnet Inc. that will expand distribution throughout the Americas.
The Aliso Viejo-based chipmaker announced the deal earlier this month with Avnet Memec, a division of Avnet Electronics Marketing.
Under the deal, Avnet Memec will distribute Microsemi’s radio frequency, power, converter, mixed-signal, analog, integrated circuits and system products.
Avnet Memec already distributes Microsemi’s lines of flash-based, system-on-chips and programmable digital chips.
The partnership extends Microsemi’s reach in a number of markets, including aerospace, alternative energy and smart grid applications, according to Michael Sivetts, vice president of Microsemi’s worldwide distribution sales division.
The company is currently engaged in a hostile take-over bid for Ottawa, Canada-based Zarlink Semiconductor Inc.
