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The bottom line on the Brocade deal is literally a bottom line calculation, according to Broadcom. Dan Jones, Mobile Editor, Light Reading "They are still leading in several networking chip markets including switches!"īroadcom is trading up 2.27% at $153.04 Euros a share ($169.67) on the news. "Does Broadcom want to become an enterprise storage business?" the analyst ponders. "Avago bought LSI and Broadcom for storage so I guess this just continues that movement," Stanley notes. As it turns out, truth is stranger than the rumor, as the chipmaker is selling the apparently growing and successful elements of Brocade to focus on a fibre SAN business that appears to be declining. At the time, Light Reading said that a buy out would be a "remarkable" move for Broadcom. Rumors about Broadcom buying Brocade started on Monday. "I assume they are selling the Brocade IP Networking business to avoid competing with their networking and wireless customers," Heavy Reading Analyst-at-Large Simon Stanley tells us. (See Brocade Revenue Climbs on Ruckus Acquisition, But Earnings Fall Hard.) SAN product revenue, meanwhile, was $282 million, down 9% year-over-year. It should also be noted that Brocade said that Ruckus helped drive overall revenue up 7% in its last earnings report in August. (See Avago Seals Deal to Buy Broadcom for $37B.)įor all the latest news on 5G, visit the 5G site here on Light Reading. Avago already has a suite of millimeter wave components in its portfolio, for instance. bought Broadcom, however, for $37 billion in May 2015, the massive components operation may have enough know-how to work towards 5G small cells without outside acquisitions. Ruckus, meanwhile, had an in on the 3.5GHz small cell market with its "OpenG" program and was looking towards a future of integrated WiFi, LTE and 5G. That move seems surprising since Broadcom is already a supplier of WiFi and 4G small cell chips, as well as other wireless networking silicon. (See Brocade's $1.2B Ruckus Buy to Raise 5G Game.) At the time Brocade said that Ruckus would give it the chops to move into a 5G future. , which Brocade bought in April for $1.2 billion.
WHO WILL BUY BROCADE IP BUSINESS SOFTWARE
The most interesting aspect of the deal is that Broadcom will seek to find a buyer - or maybe buyers - for Brocade's wireless and campus networking, data center switching and routing and software networking offerings, which make up its successful data networking business. Upon completion, Broadcom says that the deal will start to bring in money, adding an anticipated $900 million of pro-forma non-GAAP EBITDA for the chipmaker's financial year 2018, which starts at the end of October 2017. The deal is expected to close by the fall of 2017.
WHO WILL BUY BROCADE IP BUSINESS PLUS
(Nasdaq: BRCD) for $5.5 billion in cash, plus $0.4 billion of net debt.
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(Nasdaq: BRCM) will acquire Brocade Communications Systems Inc. Under the terms of the deal, Broadcom Corp. In a blog post for the Fibre Channel Industry Association, of which he is president, he pointed to flash storage in data centers as a future growth market for the technology, as work on a specification for Non-Volatile Memory Express (NVMe) over Fibre Channel is almost complete.īroadcom already makes Fibre Channel chips, but acquiring Brocade's Fibre Channel business will give it something else to offer its customers, some of which are also Brocade partners.Comms chipmaker Broadcom said Wednesday that it will buy Brocade for $5.9 billion to get its hands on the company's storage business, and plans to sell off Brocade's various data networking units. Brocade reported third quarter SAN revenue down 9 percent year on year, while IP networking revenue rose 36 percent.īut Broadcom's director of tech marketing, Mark Jones, still sees a bright future for Fibre Channel, he said last month. While Brocade's Fibre Channel SAN products still account for more than half its revenue, they will soon be eclipsed by its IP networking systems. Fibre Channel doesn't play well in the virtualized SANs that hyperconvergence entails. The bit Broadcom wants to keep, Brocade's Fibre Channel SAN business, is in for a challenging time as enterprises turn to cloud storage and hyperconverged infrastructures.