Feeds

Broadcom to Emulex stockholders: Let's get these guys

Heroic rescue effort involves ruthless board-clobbering

Internet Security Threat Report 2014

Broadcom is appealing directly to Emulex stockholders to consent to proposals to call a special meeting that could toss the Emulex board out on its collective ear.

Emulex has painted Broadcom as a marauding (and drug-addled) beast, but Broadcom casts itself in quite a different light; its mission is to rescue the struggling company from its nasty old captors - board chairman Paul Folino and CEO James McCluney - and restore it to the exalted position it deserves.

Broadcom is determinedly undermining Emulex's board and leadership by laying bare the company's under-performance relative to QLogic and the market generally in a presentation (pdf). We and stockholders are shown how Emulex's leadership over-promises and under-delivers while competitor QLogic does better, and while Broadcom shows better performance than the semi-conductor market generally.

The presentation fingers Folino and McCluney as the main board reps because they own more shares than any other board member; and because the other members, it implies, are time servers with a "15 year average... tenured membership”.

Emulex's under-performance is laid out with great clarity. For example: "Emulex lost 67.1 percent of its value, compared with losses of 30.6 percent and 36.3 percent for QLogic and the NASDAQ Composite Index, respectively, for the two years ending on the day before Broadcom made its offer public."

Broadcom says analysts have learnt to distrust Emulex's expectations as to future growth. It says that Emulex's compound annual growth rate from fiscal 2004 through fiscal 2008 to the estimated fiscal 2009 results is just one percent.

After Broadcom made its offer public Emulex has publicised growth projections to 2012 that would require a 17 percent CAGR. This track record makes Emulex's recently announced "hockey-stick" revenue growth projection of dubious value. In other words they are unrealistic and unbelievable and require Emulex to get value from its recent design wins that it has never achieved in the past five years.

What Broadcom is doing is contacting Emulex stockholders and asking them to agree to its call for proposals enabling them to force through a special stockholder meeting, which can discuss Broadcom's takeover proposals.

Scott McGregor, Broadcom's President and CEO, said: "Supporting this Consent Solicitation gives Emulex stockholders the option to consider their choices, without having to commit at this time to any one choice. Our proposals in the Consent Solicitation would give Emulex stockholders the ability to be heard in the most important matters affecting their investment.

"Contrary to misleading statements by Emulex about our proposals, support for the consent solicitation does not obligate Emulex stockholders to tender their shares to Broadcom or to elect new Board members."

What about the Emulex coke-hound accusations, about Broadcom being unfit because of influence still peddled by a founder facing federal drug-related charges as well as stock option back-dating ones?

"Emulex has... resorted to costly, mudslinging litigation that is wholly irrelevant to our offer, entirely without merit and has no place in today's prevailing standards of sound corporate governance and responsible Board conduct," McGregor responded. "These actions demonstrate that the Emulex Board is unlikely to enter into legitimate negotiations toward a transaction in the stockholders' best interest unless Emulex stockholders take action."

And, unless they do, Broadcom could walk away.

There it is, the hint of stick among all the carrots. Emulex stockholders should not trust their board to repesent their interests. If they want Emulex to be saved, there's only one answer they can give to Broadcom's request. ®

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.