Broadcom aims big guns at Emulex

"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. ®