NEWPORT BEACH, Calif.--Conexant Systems Inc. today announced plans to acquire an Israeli fabless chip supplier of high-speed physical layer networking solutions and a network software company in Massachusetts to expand its IC communications business.
To accelerate development of high-speed optical networking ICs, Conexant said it has agreed to purchase privately-held Novanet Semiconductor, based near Tel Aviv, for 2.4 million in stock, valued at $120 million, plus certain payments of up to $35 million if performance targets are met.
Also today, Conexant said it was acquiring software supplier NetPlane Systems of Dedham, Mass., in an all-stock transaction. Under an agreement, shareholders of NetPlane will receive 2.7 million shares of Conexant stock, valued at $140 million. A portion of that total is subject to future financial performance targets, said the Newport Beach semiconductor company.
Conexant said NetPlane's software will complement its communications semiconductor portfolio and accelerate the company's entry into the network switching business following its recent acquisition of San Jose-based HotRail Inc., which specializes in high-speed switch fabric and backplane channel technology (see June 27 story). The Newport Beach company also said the purchase of NetPlane will complement its earlier acquisition of Maker Communications Inc., a supplier of network processors and software (see March 13 story).
Ten-year-old NetPlane has extensive experience in frame relay, asynchronous transfer mode (ATM), multiprotocol label switching (MPLS) and Internet protocol (IP) technologies, as well as emerging standards for next-generation voice transmission over optical packet networks, said Conexant.
Meanwhile, two-year-old Novanet is expected to help Conexant to speed development of its optical chip portfolio, in particularly OC-48 solutions for 2.4-gigabit-per-second transmissions that support worldwide synchronous optical network (SONET) and synchronous digital hierarchy (SDH) standards.
"Novanet brings to Conexant a team of mixed-signal and digital VLSI designers that will significantly accelerate our development of OC-48 framing, multiplexing and transceiver solutions," said Raouf Halim, senior vice president and general manager for Conexant's Network Access Division.
The Israeli fabless chip company is scheduled to release an OC-48 framer with integrated clock and data recovery (CDR) unit in the first quarter of 2001. Novanet is also currently sampling a quad OC-3 integrated framer/CDR device, which Conexant said will strengthen its OptiPHY framing and multiplexing portfolio.
Software supplier NetPlane has more than 200 customers worldwide, and its products have been used in more than 250 equipment designs. The company's president and CEO, Deepak Shahane, will manage the subsidiary organization after the completion of the acquisition and report to Raouf Halim, senior vice president and general manager for Conexant's Network Access Division.
"The acquisition of NetPlane brings to Conexant extensive communications software expertise that will enable us to offer highly integrated, sophisticated solutions for next-generation networks," Halim said.
In the midst of these acquisition announcements, Conexant--the former chip unit of Rockwell International Corp.--posted record revenues of $530.5 million in the fiscal quarter, ended June 30, an increase of 39% from $380.3 million in the same period last year. Sequentially, Conexant's revenues were up 6% from $501.7 million in the prior quarter.
Conexant today said its net income reached $51.5 million, or $0.22 per share, in the fiscal quarter, compared to $25.7 million, or $0.12 per share, on a pro forma basis.
"Looking to fiscal year 2001, we anticipate continued strong demand across all of our businesses," said Dwight W. Decker, chairman and chief executive officer of Conexant. "Our revenue outlook has improved to $2.7 billion, up 30% over the current year. We expect our expansion platform businesses to grow more than 40% in the aggregate, led once again by our network access and wireless communications divisions.