IRVINE, Calif. Broadcom Corp. will acquire Digital Furnace Corp. (Atlanta), a supplier of communications algorithms and software that supports interactive services over broadband networks. Digital Furnace's Propane software runs on Broadcom's chip sets, and the acquisition is expected to help Broadcom reduce the cost of integrating voice and data over existing cable television networks.
"The Digital Furnace software will turbo-charge Broadcom's cable-modem technology, optimizing the full capabilities of our chip sets," said Henry T. Nicholas III, president and chief executive officer of Broadcom (Irvine, Calif.). "We can offer our cable modem customers superior and wider performance capabilities, allowing them to differentiate themselves in the expanding residential and business markets."
Broadcom plans acquire to Digital Furnace with 750,000 shares of common stock, and it will account for the transaction as a pooling of interests with a one-time charge in the first quarter to cover related expenses. The boards of both companies have approved the merger. Shareholders of Digital Furnace must approve the sale. Once the transaction has closed, Digital Furnace will be integrated into Broadcom's Residential Broadband Business Unit, which is based in Atlanta.
According to Broadcom, the Propane software has the ability to provide cable TV network operators the ability to increase "reverse-path" capacity from the subscriber to the network. This reverse-path capacity is needed for cable modems and telephone service over those existing networks. Depending upon the network configuration, Digital Furnace's software can increase the capacity up to three times, said Broadcom.
Citing a forecast by Forrester Research Inc., Broadcom said that about 26 million households are expected to have Internet access with cable modems by 2005, and that 20 percent of the U.S. homes with Internet access will have phone service through cable.
"With the added capacity provided by Propane, cable operators deploying Broadcom-based communications equipment can now greatly increase their number of interactive customers and resulting service revenue over existing broadband networks," said John Lippington, president, chief executive officer and co-founder of