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Broadcom to Buy Newport for $1.28 Billion

NEW YORK — Chip maker Broadcom Corp. (BRCM.O) on Monday took another step in its aggressive growth plan, buying privately-held NewPort Communications Inc. for $1.28 billion in stock as part of an expansion into the fast-growing fiber optics communications business.

The deal is the latest in a wave of acquisitions for Irvine, Calif.-based Broadcom, which wants to be a one-stop-shopping equipment and chip supplier to link computers, telephones and televisions over high-speed networks.

Shares of Broadcom were up 8-15/16 to 234 near midday on the Nasdaq stock market following news of the deal.

Broadcom said it would issue about 5.5 million Class A common shares in exchange for all of NewPort's preferred and common stock, employee stock options, warrants and other rights. NewPort is also based in Irvine.

The deal, expected to close within 60 days, is Broadcom's 13th acquisition since June 1999 and comes just one week after it announced plans to buy Silicon Spice Inc., a developer of semiconductor technology, for about $1.2 billion. Broadcom also recently unveiled plans to buy Altima Communications Inc., a maker of networking circuits, for about $533 million.

NewPort supplies high-speed communications chips for the optical networking industry to enable the telecommunications industry to support emerging bandwidth demands of multi-server digital voice, data and video services.

"The acquisition of NewPort Communications ... is not only synergistic with our 10-gigabit ethernet technology but is also complementary to the communications processor technology that we are acquiring through our merger with Silicon Spice Inc.,'' Broadcom President and Chief Executive Henry Nicholas said in a statement. "Together, these acquisitions will provide Broadcom with a powerful platform to address the rapidly growing wide area networking marketplace.''

Founded in 1996, NewPort's current investors include Cisco Systems Inc. (CSCO.O), the world's largest producer of networking gear, and Lucent Technologies Inc. (LU.N), the world's No. 1 telecommunications equipment maker, Broadcom said. Cisco and Lucent are also among NewPort's largest customers.

"It's a fast-growing area and it looks like a pretty good acquisition,'' said John Geraghty of Gerard Klauer Mattison.

In connection with the deal, Broadcom said it will record a



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