- Along with its Q1 results, Cypress Semi (NASDAQ:CY +2.7%) announces it's buying Broadcom/Avago's (AVGO +1.1%) wireless IoT chip unit, which sells, Wi-Fi, Bluetooth, and Zigbee chips, for $550M in cash. Cypress is also acquiring Broadcom's WICED IoT brand and related SDK/developer ecosystem.
- With the Broadcom unit having revenue of $189M during the last 12 months, Cypress is paying 2.9x trailing sales. The deal is expected to close in Q3.
- Cypress: "The acquisition strengthens Cypress's position in key embedded systems markets, such as automotive and industrial, and establishes it as a leader in the high-growth consumer IoT market, a segment that includes wearable electronics and home automation solutions."
- Broadcom notes the deal doesn't cover its wireless connectivity offerings for phones, notebooks, set-tops, and Wi-Fi access points. The company has said it's looking to divest some assets in the wake of the Broadcom/Avago merger, as it tries to streamline its offerings and pay off some of the debt taken on to help finance the merger.
- Separately, Cypress states long-time CEO T.J. Rodgers will step down this week. While the board searches for Rodgers' successor, daily operations will be handled by an Office of the CEO featuring several senior execs.
- Rodgers: "This March, Valeta and I celebrated my 68th birthday in Mexico. Upon reflection, while I am still passionately interested in Element 14, silicon, I have always planned not to be spending most of my time in the last decade of my career immersed in the details of the operations ... And, to be completely candid, the board and even the executive staff have urged me to bring new blood into operations." He'll continue to work on some projects for Cypress.
- Cypress is guiding for Q2 revenue of $440M-$470M and EPS of $0.10-$0.14, in-line with a consensus of $454.8M and $0.11. Both Cypress and Broadcom are higher.