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August 7, 2015

Qualcomm refocuses on fixed line with Ikanos

Buy comes in the wake of weak Q3 results and restructuring plans.

By Alexander Sword

Qualcomm has entered into a definitive agreement to acquire Ikanos, a broadband networking semiconductor and software provider.

The chip-maker’s subsidiary Qualcomm Atheros will buy all shares of Ikanos for $2.75 per share in a deal worth $47 million.

The deal has already been approved unanimously by Ikanos’s board of directors, with the transaction expected to close before the end of the year.

The move comes in the wake of disappointing Q3 results from Qualcomm, which saw revenue for the company of $5.8 billion, a 14 percent year-on-year fall from $6.8 billion. In addition, operating income fell 40 percent to $1.2 billion and net income was down 47 percent to $1.2 billion.

"Qualcomm CDMA Technologies (QCT) struggled during the quarter as several negative dynamics intensified," CCS Insight commented.

"The shift in high-end phones toward the iPhone and to a lesser extent Samsung’s Galaxy S6 meant Qualcomm’s opportunity for higher-value parts continued to diminish.

"In addition, as predicted by CCS Insight in previous analysis, other products featuring the Snapdragon 810 chipset saw little momentum.

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"This resulted in a drawdown on existing inventory thus hitting demand for premium Snapdragon chips. A bright spot was growing share in the low end of the Chinese market."

Acquiring Ikanos will allow Qualcomm Atheros to boost its footprint in the carrier fixed line segment; Ikanos brings broadband access and a home gateway for enhancing user experiences in the home.

Rahul Patel, SVP and GM, connectivity, Qualcomm Technologies, Inc commented: "The combination of Qualcomm Atheros’ broad home gateway IP portfolio, including Wi-Fi, powerline, small cell, and Ethernet switch technologies, and Ikanos’s advanced wired modem technology, is designed to create a complete solution for a wide range of home gateway products to better serve the carrier segment."

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