Feeds

Broadcom aims big guns at Emulex

Resorts to rough wooing

Internet Security Threat Report 2014

Update Broadcom has accused the Emulex board of "intransigence", after announcing an all-cash $9.25/share offer for the network adapter and array switch vendor.

Broadcom president and CEO Scott McGregor said: "We are disappointed by Emulex Corporation's rejection of Broadcom's proposal which would deliver substantial, immediate and highly certain value to Emulex's stockholders, while further providing significant benefits to customers and employees alike."

Broadcom also announced the filing of a preliminary consent solicitation statement to amend Emulex's Bylaws to allow stockholders to call a special meeting of stockholders.

It solicits stockholders' consent for certain amendments to Emulex's Bylaws (including allowing Emulex stockholders holding 10 per cent or more of the shares outstanding of Emulex to call a special meeting of stockholders), consent for appointment of representatives of Broadcom as stockholders' agents for purposes of calling a special meeting of the stockholders of Emulex and consent for repealing any amendments of Emulex's Bylaws adopted by its Board of Directors on or after January 15, 2009, understood to be a reference to the Emulex poison pill takeover defence.

Demonstrating a level of impatience with the Emulex board and riding somewhat roughshod over its wish to keep communications private, McGregor said: "The Emulex Board's response on Monday and its continued unwillingness to engage in discussions with Broadcom are clearly not in the best interests of either its stockholders or its customers.

"This intransigence could cause needless delay in efforts to combine our two companies, leading to further deterioration of Emulex's market share and stockholder value."

McGregor proceeded to hammer more nails in the coffin of sensitive and respectful discourse, saying: "Emulex's Board has taken steps, including the adoption of a 'poison pill' and the imposition of bylaw amendments, to erect barriers to stockholders' ability to express their will as owners of Emulex. While we much prefer to arrive at a negotiated agreement with Emulex, the Emulex Board has left us with no choice but to ask Emulex stockholders to call for a special meeting of stockholders so that they can consider the merits of our offer for themselves."

Then Broadcom fastened the lid even tighter, stating: "While Emulex has touted its "design wins" in its response to Broadcom and in other communications with the financial community, it has failed to demonstrate an ability to convert design wins into either revenue growth or market share. Over the last several years, including this most recent quarter, Emulex has continued to lose share to its larger competitor.

"In fact, in its most recent quarter, Emulex's revenue fell short of analysts' consensus expectations, and the midpoint of Emulex's revenue guidance for the June 2009 quarter implies that Emulex is likely to deliver its 6th quarter of sequential revenue decline. In addition, Emulex's primary competitor (understood to be QLogic) said last week that it continued to gain share in key markets during the most recent quarter, after achieving record net revenues in 2008."

Broadcom seems to be saying that Emulex is a crap company because of its management's inability to turn design wins into profitable growth. McGregor's team could do better than the Folino-McCluney combination running Emulex.

Broadcom said: "Emulex's highly skilled employees would have greater opportunities to enhance their careers as a result of access to Broadcom's Ethernet portfolio, our intellectual property and tools and the enhanced sales, service and manufacturing support our greater scale makes possible."

Broadcom reiterated the comparative value of its offer, saying it represented a 42 per cent premium over the median 12-month stock price target and an approximately 85 per cent premium over Emulex's enterprise value as of the closing price of Emulex common stock on April 20, 2009.

Emulex is a rabbit in the headlights of the onrushing Broadcom truck. Can it jump out of the way in time? Unless extended, the tender offer is scheduled to expire at midnight, Eastern time, on Wednesday, June 3, 2009.

Update

Emulex issued a statement saying its Board of Directors, consistent with its fiduciary duties and with the assistance of its financial and legal advisors, will review the tender offer commenced today by Broadcom. There will be no further comment at this time. ®

Beginner's guide to SSL certificates

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
'Urika': Cray unveils new 1,500-core big data crunching monster
6TB of DRAM, 38TB of SSD flash and 120TB of disk storage
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
SDI wars: WTF is software defined infrastructure?
This time we play for ALL the marbles
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
Oracle hires former SAP exec for cloudy push
'We know Larry said cloud was gibberish, and insane, and idiotic, but...'
Symantec backs out of Backup Exec: Plans to can appliance in Jan
Will still provide support to existing customers
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.