Avago Technologies Limited
) recently announced a deal to acquire CyOptics, Inc. - a leading
manufacturer of Indium Phosphide (InP) optical chip and component
technologies - for $400 million in cash. This transaction is
expected to close by third quarter 2013.
CyOptics serves the data communication and telecommunication
markets. With this acquisition, Avago will boost its fiber optics
portfolio for emerging 40G and 100G enterprise and data center
markets leveraging CyOptics' single-mode InP laser, receiver and
photonics integration capability. Earlier, in 2012, CyOptics
generated revenues of $210 million, up 21% year over year.
Consequently, the acquisition is expected to augment the top-line
of Avago once the integration is complete.
The transaction is a win-win situation for both the companies.
Avago is a leader in the strong wired infrastructure market. The
acquisition will aid Avago's optical components business and
enable it to serve growing segments of the access, metro and
long-haul markets in addition to the enterprise and data center
segments. On the other hand, CyOptics will derive benefits of the
leadership position of Avago, thus benefiting its own
Avago is a premier designer, developer and global supplier of
a broad range of analog, mixed signal and optoelectronics
components and subsystems. The company serves three primary
target market segments: wireless communications, wired
infrastructure, and industrial and other.
Avago currently has a Zacks Rank #3 (Hold). Other stocks that
look promising and are worth a look now are
), each having a Zacks Rank #2 (Buy).
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