Processors Toolkit

Chip firm snaps up Cicada

Paul Festa CNET News

Published: 30 Dec 2003 10:20 GMT

Communications-chip maker Vitesse Semiconductor said it would acquire privately held Cicada Semiconductor in a $66m (£37.3m) deal that Vitesse expects to result in $10m of new revenue next year.

Vitesse has collaborated with Cicada for more than a year on gigabit-speed network switch products that combine Vitesse's LAN (local area network) switches with Cicada's copper transceivers.

Most of the $10m return that Vitesse anticipates from the transaction next year will come in the second half, when customers are expected to upgrade their 10/100mbps networks to gigabit Ethernet speeds.

"We expect this acquisition to double our revenues in the LAN switch market and to position us to gain share as the market embraces gigabit switch products," Lou Tomasetta, chief executive officer of Vitesse, said in a statement.

For its fiscal year ended 30 September, Vitesse reported $156.4m in revenue.

Vitesse said it expects Cicada shareholders to approve the cash deal in the first quarter of the coming year. By closing, Cicada will have reduced its work force to about 40 employees from about 55 now. Most of the remaining staffers will work on product development.