) recently accepted the acquisition bid by
) for $6.6 billion in cash. Post-merger, LSI shareholders will
receive a cash payment of $11.15 for each LSI share. The
transaction is expected to be completed within the first half of
2014, subject to regulatory approvals and fulfillment of
customary closing conditions.
The strategic move was aimed to diversify Avago's existing
business line from wired infrastructure, wireless and industrial
businesses to the storage chip market to boost revenues in the
face of industry consolidation and challenging macroeconomic
It is worth noting that with the announcement of the deal, LSI
shares jumped 38.6% to close at $10.96 on Dec 16. This
substantial jump has resulted in a year-to-date return of 45.8%
on LSI shares.
We believe that LSI was a potent acquisition target as the
company has a broad range of products that enables it to serve a
diverse clientele in the hard disk drive (HDD), server and
networking end markets. Also, the company's association with
) in the networking space is a positive.
Moreover, LSI's product launches and higher sales of flash-based
products are expected to provide adequate support to revenue
growth. In addition, LSI's rapid traction in the growing
PCIe flash adapter market segment coupled with continuous share
buyback and dividend payout are expected to boost investor
On Oct 23, LSI reported modest third-quarter 2013 results with
the top line lagging the Zacks Consensus Estimate but the bottom
line matching the same. The continuing macro uncertainty,
competition from its peers, a declining PC market and the
company's conservative guidance are near term concerns.
Currently, LSI carries a Zacks Rank #3 (Hold).
Juniper Networks, Inc.
) is a better-ranked stock in the technology sector with a Zacks
Rank #1 (Strong Buy).
AVAGO TECHNOLOG (AVGO): Free Stock Analysis
CISCO SYSTEMS (CSCO): Free Stock Analysis
JUNIPER NETWRKS (JNPR): Free Stock Analysis
LSI CORP (LSI): Free Stock Analysis Report
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