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Broadcom turns away after Emulex rejects it again

Gets coat, wonders what to buy now

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Emulex has looked at Broadcom's increased offer to take it over, sniffed, and said it undervalues the company again. Broadcom is dropping its bid.

It's the same Emulex response as before, pretty much. The bid undervalues Emulex' long-term prospects and it's not in the best interests of Emulex' shareholders. Executive chairman Paul Folino said: "We would of course give full consideration to a bona fide offer from any party that reflects the full value of the Company."

Broadcom raised its bid from $9.25/share to $11.00/share - meaning spending an additional $148m on its original $764m bid - and it's not a bona fide offer? Strewth. Bona fide means good faith, by the way, and refers to a person or organisation being in or having a mental and moral state of honesty and conviction.

Broadcom wanted to take over Emulex for its line of Fibre Channel over Ethernet (FCoE) Converged Network Adapters (CNAs), technology which Broadcom could use in the Ethernet chips it makes and sells. But Emulex does not want to converge with Broadcom.

Emulex has also released its fiscal 2009 results and is bragging about four new tier 1 OEM design wins, as if to say, 'see, we can do it successfully on our own.' Two of the four relate to the CNAs, which is a relief for Emulex. Getting HBA design wins is old hat now.

Broadcom has consistently disparaged Emulex's go-it-alone growth prospects. Jim McCluney, Emulex' president and CEO, said: "These new design wins further validate our projections of $600m in revenue ... in fiscal year 2012." Take that, Broadcom.

Emulex expects to report revenues of $78m - $79m million for its fourth fiscal 2009 quarter, which is towards the upper end range it hoped for back in April. That would bring full fiscal 2009 revenues to $377m - $378m, which is about $110m down on the previous year's $488.3m income. It's quite a long way short of $600m.

Broadcom has decided to walk away and will allow its previously announced tender offer for Emulex stock to expire at midnight Eastern Time on July 14, 2009. It will not accept for payment any shares that have been tendered and will return those shares as promptly as practicable after the tender offer expires. It will now look elsewhere for acquisition possibilities.

Game, set and match to Emulex. ®

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