Broadcom will acquire privately-held NewPort Communications in a deal worth around $1.2bn. NewPort makes optical communications chips, used in construction of fibre optic infrastructure.
Broadcom said the deal will allow it to offer optical communications OEMs and laser module suppliers with a broader portfolio of optical and wide area network (WAN) infrastructure products, including transceivers, framers, communications processors and high-speed serial interface devices.
GartnerGroup forecasts the market for WAN optical networking chips to hit $1.3bn in 2001.
Cisco Systems, Lucent and Sumitomo are investors in and some of the largest customers of NewPort. Other large customers include Alcatel, Ciena, and JDS Uniphase.
The deal calls for Broadcom to swap 5.5 million shares for all outstanding shares of NewPort. Based on Friday's closing price of 225 1/16, that would value the transaction at $1.24bn.
Broadcom expects to take a one-time charge to write-off for purchased in-process research and development expenses in the third fiscal quarter.
Earlier this month Broadcom shelled out $1bn worth of stock to acquire Silicon Spice, which makes semiconductor technology for high-density voice, fax and data packet transport over wide area networks.
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