Feeds

Broadcom acquires Sand Video

Move to trigger more codec M&As?

  • alert
  • submit to reddit

5 things you didn’t know about cloud backup

The acquisition this week of Sand Video by Broadcom is just about as logical as you can get in the M&A business. Sand Video had a lead, albeit only a small one, in the silicon for the video encoding market, and Broadcom operates as market leader or close in every other broadband and communications chip market.

The price of just $77.5m, most of it in Broadcom shares and $7.4m in cash, is a steal, and yet the shareholders of Sand Video seem to be getting their money's worth given that it has had only a little venture capital funding.

Faultline named Sand Video as one of its top 50 start-ups back in August last year after it launched the first silicon for the H.264 compression standard that is expected, with Windows Media 9, to drive next generation video compression.

But it is likely that new entrants, including larger firms such as Texas Instruments, LSI Logic and specialists such as Equator Technologies, will soon be snapping at Sand's heels and it may well need the protection of a larger parent organisation.

Sand supports H.264 - also known as MPEG 4 Part 10 Advanced Video Coding - on its SV-IP01 chip and the chip core design is sold either in chip form or as a piece of intellectual property for others to drop into a chip they are building which includes other functions. Sand Video was funded by an $8m equity investment in November 2002, led by Baker Capital, which included Navigator Technology Ventures and a number of private investors from the CommonAngels of Boston.

The Broadcom range post merger will mean potential one-stop shopping for chips for digital TVs, cable, satellite and IP set-top boxes, digital video recorders (DVRs), high definition DVD recorders and players, and video conferencing.

The Sand Video team with be merged into the existing Broadcom global digital video team. Broadcom will pay roughly $70.1m in the form of 1.666m of its shares plus and $7.4m in cash.

Broadcom says that it expects to record a one-time charge for purchased in-process research and development expenses related to the acquisition, in its second fiscal quarter, ending 30 June.

Broadcom is already strong in other broadband chip areas such as digital cable, set-top boxes, HDTV, DSL modems and residential gateways, high-speed transmission chips for local, metropolitan, wide area and storage networking, home and wireless networking, cellular and terrestrial wireless communications and Voice over Internet Protocol (VoIP) gateways.

The Broadcom move is almost certain to create a land-grab for video compression companies, many of which are under-funded and private and which would welcome an approach. One company, Conexant, which has just acquired its way to the same proportions as Broadcom acquiring Globespan Virata just after it had taken on Wi-Fi market leader, Intersil, may well feel compelled to cover such a move and make its own acquisition.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

Related stories

Chip start-up boosts Wi-Fi rate by '10-20 times'
Can AMD's Alchemy turn Wi-Fi into gold?
Broadcom bags Cirrus storage patents
Broadcom jumping the gun with pre-standard 802.11n?
Broadcom bites back against Intel-Mobilian, Atheros

Secure remote control for conventional and virtual desktops

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
So, Apple won't sell cheap kit? Prepare the iOS garden wall WRECKING BALL
It can throw the low cost race if it looks to the cloud
EE fails to apologise for HUGE T-Mobile outage that hit Brits on Friday
Customer: 'Please change your name to occasionally somewhere'
Time Warner Cable customers SQUEAL as US network goes offline
A rude awakening: North Americans greeted with outage drama
We need less U.S. in our WWW – Euro digital chief Steelie Neelie
EC moves to shift status quo at Internet Governance Forum
EE plonks 4G in UK Prime Minister's backyard
OK, his constituency. Brace yourself for EXTRA #selfies
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.