) recently announced that it has completed the acquisition of
NetLogic Microsystems, Inc.
) at $3.7 billion, as decided on September 12, 2011.
NetLogic is a global fabless semi-conductor company, selling
networking processors and integrated circuits. Its solutions are
primarily used as high-performance systems in switches, routers,
wireless base stations, security appliances and other various
connected media components produced by original equipment
The acquisition was done with the primary intent of ameliorating
Broadcom's infrastructure and networking business platform, thereby
making them more cost and time efficient. NetLogic shall also bring
forth new advancements such as its multi-core embedded processor
and knowledge-based processor solutions.
Broadcom's management expressed its alacrity on the venture by
averring the acquisition to be a trademark milestone for the future
of the company. We consider the acquisition to be quite a momentous
one, keeping in mind the current trends of cloud computing and
mobile and video traffic prevalent in the economy along with the
existing dominance of Broadcom's Networking and Infrastructure
segment in the market.
The company recently reported the financial results of its
fourth quarter of 2011, whereby there was a 13% drop in the
Infrastructure and Networking businesses, mainly due to the
softness in demand arising from the Ethernet switches and physical
layer transceiver (PHY) solutions. We can perspicaciously say that
the present acquisition will elevate this segment considerably in
the financial results of Broadcom's first quarter of fiscal
We maintain our Neutral recommendation on the stock. Our
recommendation is supported by Zacks #3 Rank, which translates into
a short-term rating of Hold.
BROADCOM CORP-A (
): Free Stock Analysis Report
NETLOGIC MCRSYS (NETL): Free Stock Analysis
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