Qualcomm is expanding into the fixed broadband market with the proposed acquisition of Ikanos Communications, a maker of chips for broadband modems and gateways. The move into the fixed market comes as Qualcomm's traditional business of mobile phone processors is under pressure from market saturation and new competition. The company's results have also suffered from a string of regulatory investigations into its licensing practices.
Qualcomm said it sees the home gateway as a hub for a range of new internet services. It will be able to combine its existing technology for Wi-Fi, Ethernet switch, small cells and powerline with Ikanos' strong position in the DSL modems market, including new technologies such as G.fast. Ikanos also offers multi-mode gateway processor and accelerator technology for fibre, LTE, Ethernet and hybrid-copper applications, remote diagnostics software and a range of central office products.
Qualcomm is offering USD 2.75 per share for Ikanos, a premium on its last closing price of USD 1.75. This puts the total cost for the company's equity at just over USD 47 million, and Qualcomm will also assume the around USD 35 million in liabilities at Ikanos. The takeover is expected to close by year-end, assuming a majority of shares tendered and regulatory approval.
Ikanos separately reported second-quarter results showing its net loss unchanged year-on-year at USD 12.3 million. Revenues fell slightly to USD 11.1 million from USD 11.3 million, while the company's gross margin rose to 51 percent from 49. The company had USD 16 million in cash at the end of the quarter and also announced a USD 10 million term loan from Alcatel-Lucent, its technology partner in the access market.
