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Chipmaker Broadcom To Buy Network Gear Maker Brocade For $5.5 Billion (reuters.com)

An anonymous reader quotes a report from Reuters: Chipmaker Broadcom Ltd said it would buy Brocade Communications Systems Inc for $5.5 billion, pushing deeper into the fast-growing market for network equipment used in data centers. The deal, the latest in a consolidating chip sector, will allow Broadcom to corner a larger share of the data center products market by using Brocade's fiber channel switches that speed up data transfer between servers and storage devices. Singapore-based Broadcom, formerly Avago Technologies, is known for its connectivity chips used in products ranging from mobiles to servers, while California-based Brocade makes networking switches, software and storage products. Broadcom said it planned to sell Brocade's networking business, which makes controllers and access points that help businesses offer high-speed internet to their customers, to avoid competing with its top customers such as Cisco Systems Inc.

33 comments

  1. Sounds like good news - for Cisco by haruchai · · Score: 1

    Who'll buy the pieces Broadcom doesn't want

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    Pain is merely failure leaving the body
    1. Re:Sounds like good news - for Cisco by haruchai · · Score: 1

      missing question mark - sigh.
      Slashdot, its way pas time for an edit feature.

      --
      Pain is merely failure leaving the body
    2. Re:Sounds like good news - for Cisco by haruchai · · Score: 1

      GAH!!!! Another typo - "way PAST time" not "pas" time

      --
      Pain is merely failure leaving the body
    3. Re:Sounds like good news - for Cisco by TFlan91 · · Score: 1

      just to drive home the point, eh?

    4. Re:Sounds like good news - for Cisco by haruchai · · Score: 1

      I also made an "its" instead of "it's" typo. Not my finest hour.

      --
      Pain is merely failure leaving the body
    5. Re: Sounds like good news - for Cisco by Anonymous Coward · · Score: 0

      You still got a few minutes to go to reach the full hour mark! Shine on!

    6. Re:Sounds like good news - for Cisco by Kjella · · Score: 1

      missing question mark - sigh.

      GAH!!!! Another typo - "way PAST time" not "pas" time

      I also made an "its" instead of "it's" typo. Not my finest hour.

      Don't worry, go join a game company. They're all in the "ship this steaming pile now, we'll patch it later" mode. I kinda like the discipline, you get it right the first time or you look the fool except here it doesn't really matter. Maybe I should send some of my fellow developers to take a /. class before I let them push code to production, maybe they'd get better at QA. Or not, you've been here longer than me...

      --
      Live today, because you never know what tomorrow brings
    7. Re:Sounds like good news - for Cisco by Anonymous Coward · · Score: 0

      AMD? They spend their money wisely...

  2. well, good by slew · · Score: 1

    At least I won't get broadcom and brocade confused anymore ;^)

  3. Quick! Somebody get me an alka selzer! by Anonymous Coward · · Score: 0

    This is never a good thing.

  4. Offworld please by wjcofkc · · Score: 2

    Can we stop moving some of this off world yet? According to Sci-fi it will buy us some time. If we have a strong GA Authority that is. But seriously, can we either do that or leave this fucking planet by the few best (not me) and become the survivors already. I don't see many possibilities that are not bound to fail. Mars it is, send the best only and cross your fingers.

    --
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    1. Re:Offworld please by Anonymous Coward · · Score: 0

      Everybody knows the Galactic Authority are a bunch of powerless thugs who keep the weak insignificant proles in line while the Corporations hold all the real power.

  5. new product line coming... by Anonymous Coward · · Score: 1

    the brocade name will be retired in favor of the new broadcom cockblock.

  6. vyatta by Anonymous Coward · · Score: 0

    What might become of vyatta with the sale of the networking business?

    1. Re:vyatta by Anonymous Coward · · Score: 0

      Vyatta isn't any better than Vyos at the moment, so unless you specifically need the support, there is no reason to pay for it.

  7. Great... by Anonymous Coward · · Score: 0

    Now I'll have to compile weird kernel modules to get Brocade equipment to work with Linux.

    1. Re:Great... by unixisc · · Score: 1

      Why, what does Brocade currently work w/?

  8. Why? by Daniel+Boisvert · · Score: 3, Interesting

    This acquisition doesn't make any sense to me. Broadcom is buying all of Brocade, selling off the pieces poised to grow in the wireless and IP networking segments, and keeping the part that serves the shrinking storage-specific networking market? Can somebody explain this to me?

    I hope they don't wreck the IP networking and wireless companies. I really like the Brocade VCS fabric stuff and Ruckus wireless kit..

    1. Re: Why? by Anonymous Coward · · Score: 1

      This is a financial buyout, plain and simple. Broadcom (Avago) will keep the fibre channel business that makes money while cutting fat to improve the bottom line. And I am willing to bet Brocade has a lot of it.

      It helps that fibre channel is a funny business. There are standards but interoperability is atrocious. There are only 2 major players on the switch side (brocade and Cisco) and there were only 2 players on the HBA side, one of which was acquired by Broadcom (Emulex) and the other by Brocade (qlogic). The plan must be that with switch + hba under one roof, it will be easier to offer a cohesive solution. Sure, it's a shrinking market, but its also captive and still worth many B$ for some years to come.

      As for the so called growth areas, it's only worth playing there if you are growing with them. And quite clearly, Brocade is not so they are just a hit on the bottom line. Doesn't matter if Brocade/com can sell them or not, tax write offs are a wonderful financial tool.

      Take always :

      Brocade management broadsided their employee's trust, however they may phrase it.

      It must be slim pickings out there for Broadcom to find a leveraged financial opportunity in a shrinking market.

      Bottom line - If they can make the numbers work as with previous acquisitions, the market is going to love it.

    2. Re: Why? by Anonymous Coward · · Score: 0

      one of which was acquired by Broadcom (Emulex) and the other by Brocade (qlogic)

      Qlogic purchased the Brocade HBA business, not the other way around.

      Brocade management broadsided their employee's trust

      Brocade management has been trying to justify the failed purchase of the Foundry ethernet business since it happened. In 6+ years, the Foundry line-of-business has done not much more than suck profits out of the fibre channel side. The Ruckus acquisition was already starting to show promise. I guess it wasn't enough that the directors thought it would move the stock price out of the $7-10 range it's been stuck in since Carney became CEO.

    3. Re:Why? by Anonymous Coward · · Score: 0

      Broadcom would be crazy to compete against their biggest ethernet/IP ASIC customers. I'd be willing to bet that they make more money selling switching ASICs per year to Cisco, Arista, HP, Dell, Juniper, etc than the whole Brocade acquisition was worth.

      So if they can't use the whole business, why the acquisition? My guess is that they'll take the FC switching business, take the chips out and resell them to all those companies I've just listed. So while the FC market isn't going to grow, they'll go from 70% market penetration to 100% market penetration, effectively growing the business without needing the market as a whole to grow.

    4. Re: Why? by Anonymous Coward · · Score: 0

      Qlogic was not acquired by Brocade, but rather Cavium, Inc (NASDAQ: CAVM).

    5. Re: Why? by Anonymous Coward · · Score: 0

      Yes, sorry about the mixup. I guess this deal screws Cavium. :-/

    6. Re: Why? by Anonymous Coward · · Score: 0

      Yup, except they don't need to "take out the chips". Just sell the switch as a whole to OEMs like HPE, Dell as a reference design. Viola - instant interoperability!

  9. Thats a cool story by future+assassin · · Score: 1

    Bro...

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    by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
  10. Cisco's not interested by seoras · · Score: 4, Interesting

    When Cisco closed down their European R&D centres in Edinburgh & Reading, Brocade came in and picked up the redundant developers.
    Cisco has lost interest in R&D and has positioned itself as a solutions provider following much the same evolution as IBM.
    Buying back what they threw away just doesn't make sense given their lack of interest in selling boxes.

    I know all this because I setup Cisco's R&D in Edinburgh when Shiva Networks closed down their acquisition Spider Systems.
    My friends working at Brocade are, understandably, very concerned about this acquisition.
    They are part of a core group of highly experienced (25+ years) network equipment developers who have never changed jobs other than when they've been acquired or laid off. (Spider->Shiva->Cisco->Brocade)
    There's little chance another Brocade will come and save them a 4th time as the network industry has matured to a point where routers and switches are now commodities and if anyone is still developing them they aren't in the UK.

    1. Re: Cisco's not interested by Anonymous Coward · · Score: 0

      Maybe Huawei?

    2. Re:Cisco's not interested by haruchai · · Score: 1

      Very interesting. But a talent pool like that must be useful to someone. Maybe Google or Facebook - or Microsoft?

      --
      Pain is merely failure leaving the body
  11. Bummer by RogueWarrior65 · · Score: 1

    Now I'm bummed that I sold my shares after they acquired Ruckus.

  12. Bro on Bro action? by Anonymous Coward · · Score: 0

    If this wasn't a press release I would have thought this was fujoshi bait...

  13. Good News For Feminists by Anonymous Coward · · Score: 0

    Chipmaker Broadcom To Buy Network Gear Maker Brocade

    The Broads are buying the Bros.

  14. What's w/ Broadcom by unixisc · · Score: 1

    A few things that struck me, since I haven't been following them closely: Broadcom is now Singapore based? And what is Avago - a Singapore company that bought Broadcom? Last I looked - albeit a while ago - they were based in S CA.

    Referring to the GP, is the wireless segment still growing? It seems to me to have reached saturation, and the wireless space is one more that has seen a lot of consolidation, particularly among chipset vendors

    1. Re:What's w/ Broadcom by Anonymous Coward · · Score: 0

      You need to research Avago. It's pretty amazing how they have grown in just 11 years to be the #3 semiconductor company out there, all through acquisitions. Their tax home is Singapore with primary design offices in San Jose. The center of gravity has shifted for the new Broadcom from So Cal to San Jose. Hock Tan might be the most under appreciated CEO out there.

      As for wireless, that's the association the press has for the old Broadcom thanks to the Apple/Samsung connection. Even the WSJ article describing the Brocade acquisition talks about "need to balance slowing wireless revenue". (paraphrasing). The reality is that for the new Broadcom, wired infrastructure is the biggest revenue maker.