Qualcomm Atheros, a subsidiary of wireless technologies provider Qualcomm (NASDAQ:QCOM), is acquiring chipmaker Ikanos Communications in an all-cash transaction valued at about $47 million. The purchase will boost Qualcomm's presence in the home gateway segment of the carrier fixed-line market.
A tender offer will be issued to purchase all of Ikanos' shares on the Nasdaq for $2.75 per share in cash. At the close of the transaction, slated to be complete by the end of 2015, Qualcomm Atheros will assume all of the manufacturer's outstanding debt as well.
"Qualcomm Atheros has always viewed the home gateway as the enabler for consumers to not only access the Internet for browsing and downloading content and video streaming, but also as the hub of the Internet in the home for a variety of reliable and high quality services," said Rahul Patel, SVP and GM, connectivity at Qualcomm, in a statement.
Qualcomm's latest purchase comes amid declining profits. The company posted a drop of nearly 50 percent in profits for its fiscal third quarter of 2015, to $1.2 billion, and lowered its forecast for the fiscal fourth quarter and full year by 15 to 30 percent.
Amid pressure from activist investor Jana, Qualcomm is undertaking fairly drastic cost-cutting measures, including plans to pare away 15 percent of its full-time workforce -- about 4,500 jobs -- and slash temporary staff in a bid to save $1.4 billion. It may also split up its chipset and licensing units -- which would put Atheros on the chipset side of things. The majority of its revenue comes from chipset sales, but licensing is a significant part of the business as well, with two-thirds of Qualcomm's profit coming from royalties collected on patents for CDMA, LTE and other wireless technologies.
Ikanos' assets may help boost Qualcomm's outlook. "The combination of Qualcomm Atheros' broad home gateway IP portfolio, including Wi-Fi, powerline, small cell, and Ethernet switch technologies, and Ikanos' advanced wired modem technology, is designed to create a complete solution for a wide range of home gateway products to better serve the carrier segment," Patel said.
For example, the company said its newly acquired assets will enable it to provide a "central hub" for Internet of Everything (IoT) enabled devices.
- see the release
- Dow Jones Business News has this article
Qualcomm to review whether to split up chipset and licensing units, will slash up to 15% of workforce
Verizon, Qualcomm among partners in Michigan test site for connected cars, autonomous vehicles
Qualcomm, NCTA continue to battle over FCC regulation of LTE-U, LAA