Broadcom Acquires Armedia, Maker of Digital Video Decoders

In an effort to broaden its consumer base and strengthen its engineering staff, Broadcom Inc. said Tuesday that it bought a maker of digital video decoders with facilities in India for $67.2 million in stock. Irvine-based Broadcom, the world's leading maker of cable-modem chips, expects to issue 702,000 Class B shares to buy Armedia Inc., a Milpitas, Calif.-based company with an Indian unit. The bulk of Armedia's 45-person staff--including nearly all of its engineers--works in Bangalore, home to more than 200 high-tech firms and a city many industry analysts call the Silicon Valley of India. The deal, which closed Monday, marks the third acquisition Broadcom has made in the last six months. "Broadcom is an engineering-driven company, and one of their biggest battles is finding good talent," said Michael Wolf, an industry analyst for Instat in Scottsdale, Ariz. "The supply of engineers based in the United States, as well as the number of engineers that can come here on a work visa, has not met the demand. This is one way to work around that problem." Buying privately held Armedia also gives Broadcom access to a new, cable-friendly market, said Jeff Lipton, a financial analyst with Hambrecht & Quist. "There are 15 million to 20 million homes with cable in India right now, not to mention all the homes that will have an appetite for the rest of Broadcom's products," Lipton said. On Monday, Broadcom also closed its previously announced acquisitions of Epigram Inc. of Sunnyvale and Maverick Networks of San Jose, giving Broadcom a wider spectrum of high-speed networking technology for homes and small offices. Broadcom stock fell $2.69 a share to close at $93.06 on Nasdaq.

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