Broadly speakingOne of the worldwide leaders in the production of computer chips that power everything from cable boxes to high-speed networks, Broadcom has astounded investors and industry observers alike with its success since its 1991 founding. CEO Henry Nicholas started the company out of his Southern California home after his previous employer, PairGain Technologies, refused to finance a separate unit to develop a new and broader line of technologies. He was soon joined by his former advisor from UCLA's electrical engineering PhD program, Henry Samueli. Today, boasting a revenue growth of 5,480 percent between 1994 and 1999, Broadcom challenges the likes of Intel - a company 50 times its size - and others for supremacy in the highly-competitive realms of chip production and broadband communications.
Broadcom has also expanded in recent years by spending nearly $1.5 billion to acquire other technology companies. In the summer of 1999, Broadcom bought Hothaus Technologies and AltoCom Inc., both manufacturers of communications software. By mid-2000, Broadcom had also acquired high-tech companies Epigram, Maverick Networks, Armedia, BlueSteel Networks, Digital Furnace, Stellar Semiconductor, Innovent Systems and Pivotal Technologies Corp.
All Broadcom, all the time
While the company's business is built around its application of computer chip technology, its expansion upon traditional cable and networking offerings has given it a leg up in the high-tech market. "Most significant customer" status with LSI Logic Corp. and partnerships with companies like Cisco, Gotcha International (a surfwear and media site targeted at Generation Y), 3Com, and TollBridge Technologies have helped Broadcom's mission to "connect everyone, everywhere, anytime." The company's aggressive development, including an expansion into fiber-optic networking, has secured its position at the vanguard of the chip industry. Broadcom was amazingly successful in the late 1990s, but its future profitability will rely upon widespread adoption of speedy broadband communication in television, computer, and telephone technology.
Altima, Spice and more acquired
In August 2000 Broadcom acquired Altima Communications Inc. in a stock deal worth up to $1.15 billion; Altima designed chips used in the small-to-medium business networking market. The deal expanded Brodcom's engineering pool, adding chips that worked inside broadband devices. Analysts suggested that Altima had been having difficulty establishing the global presence it needed to stay competitive.
The following week in August the communications-chip maker acquired Silicon Spice Inc. for $1.19 billion in stock. Silicon Spice developed semiconductor technology for voice, fax and data-packet transport. NewPort Communications Inc. also became one of Broadcom's acquisitions for about $1.24 in stock. Like Broadcom, NewPort develops high-performance optical-communications chips used in fiber-optic infrastructure.
