The acquisition expands Atheros' portfolio. Intellon's powerline communications (PLC) technology operates on the home power circuit. By combining Atheros' wireless LAN and Ethernet products with Intellon's products, Atheros will further drive the adoption of the digital home.

Pursuant to the terms of the definitive agreement, the overall acquisition consideration consists of an amount of Atheros common stock and equivalents.

Atheros expects to close the transaction in the fourth quarter of 2009, subject to Intellon shareholder approval as well as customary closing conditions and regulatory approvals.

One analyst was bullish about the deal. ''Acquisition makes sense,'' said Daniel Amir, an analyst at Lazard Capital Markets.

''The acquisition is a good fit as 1) it enables Atheros' entry into the broadband over power line space, which is synergistic to the WLAN segment in the home networking market; additionally, Intellon has a strong potential in the Smartgrid market; 2) the powerline market is expected to grow at a (greater) 30 percent CAGR in the next few years, faster than WLAN; 3) it provides Atheros with a high-gross margin business (50 percent) with room to improve COGS through reduction in supply chain costs; 4) it opens the door for better system integration with WLAN, ethernet and homeplug, the most difficult component to engineer in the home networking space; 5) Intellon provides broader exposure the carrier market with 50 plus customers; and 6 ) financially, the deal should be accretive for 2010,'' he said in a report.

In addition, Atheros (Santa Clara, Calif.) now expects third quarter revenue to range between $145 million and $150 million, a sequential increase of 29-to-34 percent from the company's second quarter revenue of $112.2 million and 5-to-9 percent higher than the company's record revenue of $138.1 million in the third quarter ended Sept. 30, 2008.

The company's previous guidance for the third quarter ending Sept. 30, 2009 was for revenue to be up 15-to-20 percent from second quarter revenue, resulting in a revenue range of $129.0 million to $134.6 million.