Broadcom is a good company. Too bad they are priced too high.....................................................
multichannel.com
Broadband Week for April 12, 1999
Chip Supplier Draws Possible Buyers
By BILL MENEZES April 12, 1999
Hot to enter the cable-modem-components market, major electronics manufacturers have waged a lengthy tug of war over Libit Signal Processing Ltd.
Herzlia, Israel-based Libit -- which, along with Broadcom Corp., is a silicon provider for the only two cable modems certified under the industry's Data Over Cable Service Interface Specification -- has fended off at least one suitor, and it is talking with several others, including giant Lucent Technologies, about possible deals.
Libit said that contrary to some news reports, it has no buyout deal yet with anyone, although other sources familiar with its talks indicated that Lucent was a clear front-runner, and that it could finish off a deal by the National Show in June.
Would-be acquirers like Lucent and rejected suitor Intel Corp. see an opportunity to bring their resources to bear quickly in a cable-modem-chip market currently dominated by Broadcom.
They are betting that modem vendors do not want to be tied to a single silicon supplier as their market grows and production demands increase. Broadcom controls an estimated 95 percent of the cable-modem-chip market.
Toshiba America Consumer Products used Libit's solution in its DOCSIS-certified modem. And Sharp Electronics Corp. and some other manufacturers are expected to use Libit chips in modems that they put up for certification later this year.
"I'd expect Libit, either with or without a Lucent deal, to have other vendor relationships online, probably around the time of the National Show," said Michael Harris, president of Kinetic Strategies Inc.
Other chip-makers, including Conexant Systems Inc., plan to enter the DOCSIS-chip market, but they have not yet landed spots in any modems certified by Cable Television Laboratories Inc. for DOCSIS.
The same goes for Lucent, Intel and other big networking-hardware companies, which can try to develop their own DOCSIS solutions, but which see a faster path to market with Libit.
"There are only a handful of players that have legitimate solutions for DOCSIS," Harris said. "If you're a major player like Lucent, and you see a market like cable, this is the quickest way."
For Libit, a buyout is only one option that the company has been exploring in light of the interest in its proven DOCSIS technology.
Libit is also weighing an initial public offering of stock -- a potentially lucrative avenue, given the continued market frenzy for virtually any Internet-related issue and the performance of Broadcom since its IPO a year ago. Broadcom's share price has risen by more than sixfold.
"A lot of people are interested in the company, so they're just getting a feel for what the market is like," Libit spokesman Earl Pennell said.
Libit rejected a buyout proposal from Intel, reportedly in the $250 million-plus range, earlier this year. The interest from the world's largest chip-maker followed its work with Libit on a draft specification for CableLabs covering cost-efficient, "host-based" cable modems.
Intel declined to comment on the buyout reports or on indications from sources that the corporate maneuvering might slow progress in development of the host-based modem specification for CableLabs.
Intel indicated as late as March that it expected the draft spec for host-based modems to be ready for submission to CableLabs by the end of that month, although spokeswoman Tammy Casey said last week that it could be several more months.
Harris noted that even without acquiring Libit, it was likely that Intel would make a cable-modem play with silicon from Level One Communications, a maker of high-speed telecommunications and networking integrated circuits that Intel is acquiring in a $2.2 billion stock swap.
A Libit spokesman said the company is still working on its part of the host-based-modem draft specification, with the intention of having it ready for submission around the time of the National Show.
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