<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE
BROADCOM BUSINESS MEDIA CONTACTS BROADCOM FINANCIAL ANALYST CONTACT
Bill Blanning or Eileen Algaze William J. Ruehle
Corporate Communications Dept. Vice President and Chief Financial Officer
949-450-8700 949-450-8700
[email protected] [email protected]
[email protected]
BROADCOM TRADE MEDIA CONTACT
Laura Brandlin
Director, Marketing Communications
949-450-8700
[email protected]
ALLAYER COMMUNICATIONS CONTACT
Mohan Maheswaran
Vice President of Marketing
408-570-0888 x116
[email protected]
BROADCOM TO ACQUIRE ALLAYER COMMUNICATIONS,
LEADING DEVELOPER OF 10-GIGABIT SWITCHING TECHNOLOGY
Allayer's Technology Relieves Bandwidth Bottlenecks within the Backbone of
Enterprise and Metropolitan Area Networks with 10x Performance Improvement
IRVINE and SAN JOSE, Calif. - October 17, 2000 - Broadcom Corporation (Nasdaq:
BRCM), the leading provider of integrated circuits enabling broadband
communications, today announced that it has signed a definitive agreement to
acquire Allayer Communications, a leading developer of high-performance
enterprise and optical networking communications chips, based in San Jose. In
adding Allayer's switch processor expertise to its product portfolio, Broadcom
continues to build its leadership in the delivery of broadband solutions for
networking services spanning local, metropolitan and wide area networks.
Broadcom's products and technology have paved the way for establishing
Gigabit-per-second connections to every corporate desktop and
multi-megabit-per-second connections to every residence. As end users enjoy the
10-fold increase in bandwidth available at the network edge, performance
bottlenecks are now shifting to optical networks in the corporate and
metropolitan backbone. Combining Allayer's 10-Gigabit-per-second (Gbps) switch
processor technology with Broadcom's Ethernet and Synchronous Optical Network
(SONET) physical layer and Serializer/Deserializer (SerDes) technologies enables
a cost-effective solution to these bottlenecks.
<PAGE> 2
Broadcom has undertaken a strategic initiative to provide end-to-end IC
solutions that increase the performance, intelligence and cost-effectiveness of
broadband communication networks worldwide. High-bandwidth switching technology
enables the aggregation of high-speed Internet traffic from the customer premise
enterprise network into the central office switching facilities in Metropolitan
Area Networks (MANs) and Wide Area Networks (WANs). Allayer's technology enables
this aggregation with a corresponding 10-times improvement in speed.
During the past year, Allayer has refocused its activities from the LAN
switching area to WAN switching products and technology, and has achieved key
design wins and strategic relationships with a number of the major enterprise
and optical infrastructure suppliers, as well as with many emerging high-growth,
optical networking startups. Broadcom's strategic relationships with the leading
network equipment vendors will enable Allayer's product portfolio to be rapidly
deployed into this marketplace.
Just as Ethernet and the Internet Protocol (IP) dominate the Local Area Network
(LAN), the trend is for greater numbers of cost-effective, packet-switched IP
networks to be established toward the networking core. Broadcom, the leader in
supplying innovative Ethernet and IP integrated circuit (IC) solutions to the
LAN, is in a unique position to leverage this packet-based expertise and provide
optimum solutions for both enterprise IP networks and the MAN/WAN fiber
backbone. Allayer's switch technology supports both 1 Gigabit and 10
Gigabit-per-second Ethernet speeds, and serves as the intersection between
access (IP-based) networks and transport (SONET) networks.
"Broadcom is committed to solving bandwidth bottlenecks wherever they occur in
the network," said Dr. Henry T. Nicholas III, President and CEO of Broadcom.
"Our products are enabling broadband connections for corporate and home users
worldwide, and as a result the bottlenecks are now shifting toward the network
core. With the addition of Allayer's 10-Gigabit switch technology, Broadcom now
provides customers a broader range of products to alleviate the congestion at
the LAN and WAN edge."
"The combined capabilities and resources of Allayer and Broadcom will bring
highly integrated system solutions to the optical communications marketplace,"
said Dr. Cheng-chung Shih, President and CEO of Allayer Communications.
"Broadcom's market presence and proven ability to deliver innovative,
cost-effective silicon solutions and Allayer's synergistic intellectual property
and talented engineering pool together promise to speed up the timetable for
delivering complete solutions for MAN and WAN networks. This acquisition opens a
tremendous number of new opportunities to us and we are quite excited at the
prospects for success."
In a report issued in August 2000, CIBC World Markets Inc. noted that Gigabit
Ethernet would naturally migrate into the local loop, unleashing capacity and
enabling broader enhanced services. According to the CIBC study, Ethernet has
already exhibited exceptional price/performance characteristics in enterprise
networks and is the dominant protocol there; as data-centric companies push more
data traffic into the local loop, it is expected that Ethernet will follow.
2
<PAGE> 3
With its acquisition of Allayer and the recent acquisitions of NewPort
Communications (WAN physical layer/transceiver technology) and Silicon Spice
(gateway and carrier access chip sets), Broadcom is rapidly widening its product
portfolio for next-generation WAN systems. In addition, Allayer's intelligent
switching processor technology is very complementary to the Broadcom(R) Content
Aware(TM) packet classification technology deployed in LANs with Broadcom's
StrataSwitch(TM) architecture. The combination of these technologies will enable
the seamless delivery of high-bandwidth, Quality of Service (QoS)-sensitive
network traffic between the enterprise desktop and the Internet, extending from
the LAN out to the MAN and WAN.
In connection with the acquisition, Broadcom will issue in aggregate about 1.23
million shares of its Class A Common Stock in exchange for all outstanding
shares of Allayer's Preferred and Common Stock and upon exercise of outstanding
employee stock options and other rights of Allayer Communications. If certain
performance goals are satisfied, Broadcom will issue up to an additional 300,000
shares of its Class A Common Stock to the stockholders and option holders of
Allayer. The merger transaction is expected to close within 60 days and will be
accounted for under the purchase method of accounting. The boards of directors
of both companies have approved the merger, which awaits approval by Allayer's
shareholders and the satisfaction of regulatory requirements and other customary
closing conditions. Broadcom expects to record a one-time charge for purchased
in-process research and development expenses related to the acquisition in its
fourth fiscal quarter, ending December 31.
ABOUT ALLAYER
Allayer Communications is a leading producer of high bandwidth network ICs for
the enterprise and optical network. The company develops scalable network
architectures and mixed-signal switching and routing ICs for the Gigabit/Fast
Ethernet and optical network markets. The corporate name -- pronounced
"All-layer" -- represents the company's long-range intention to provide silicon
solutions for all levels of the OSI networking model. Founded in 1997, Allayer's
corporate headquarters are in San Jose. For more information please contact
Allayer at 408-570-0888, or visit the corporate website at www.allayer.com.
ABOUT BROADCOM
Broadcom Corporation is the leading provider of highly integrated silicon
solutions that enable broadband digital transmission of voice, video, and data.
Using proprietary technologies and advanced design methodologies, the company
designs, develops and supplies integrated circuits for a number of the most
significant broadband communications markets, including the markets for cable
set-top boxes, cable modems, high-speed local, metropolitan and wide area
networks, home networking, Voice over Internet Protocol (VoIP), carrier access,
residential broadband gateways, direct broadcast satellite and terrestrial
digital broadcast, optical networking, digital subscriber lines (xDSL) and
wireless communications. Broadcom is headquartered in Irvine, Calif., and may be
contacted at 949-450-8700 or at www.broadcom.com.
3
<PAGE> 4
SAFE HARBOR STATEMENT OF BROADCOM CORPORATION UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995:
This release may contain forward-looking statements based on our current
expectations, estimates and projections about our industry, management's
beliefs, and certain assumptions made by us. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will"
and variations of these words or similar expressions are intended to identify
forward-looking statements. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, our actual results could differ materially and adversely
from those expressed in any forward-looking statements as a result of various
factors.
Important factors that may cause such a difference for Broadcom in connection
with the acquisition of Allayer Communications include, but are not limited to,
the risks inherent in acquisitions of technologies and businesses, including the
timing and successful completion of technology and product development through
volume production, integration issues, costs and unanticipated expenditures,
changing relationships with customers, suppliers and strategic partners,
potential contractual, intellectual property or employment issues, accounting
treatment and charges, and the risks that the acquisition cannot be completed
successfully or that anticipated benefits are not realized; the rate at which
present and future customers and end-users adopt Broadcom's and Allayer's
technologies and products in the markets for optical communications integrated
circuits; delays in the adoption and acceptance of industry standards in the
foregoing markets; the timing of customer-industry qualification and
certification of our products and the risks of non-qualification or
non-certification; the timing, rescheduling or cancellation of significant
customer orders; the loss of a key customer; the volume of our product sales and
pricing concessions on volume sales; silicon wafer pricing and the availability
of foundry and assembly capacity and raw materials; the qualification,
availability and pricing of competing products and technologies and the
resulting effects on sales and pricing of our products; intellectual property
disputes and customer indemnification claims; fluctuations in the manufacturing
yields of our third party semiconductor foundries and other problems or delays
in the fabrication, assembly, testing or delivery of our products; our ability
to specify, develop or acquire, complete, introduce, market and transition to
volume production new products and technologies in a timely manner; the effects
of new and emerging technologies; the effectiveness of our product cost
reduction efforts; the risks of producing products with new suppliers and at new
fabrication and assembly facilities; problems or delays that we may face in
shifting our products to smaller geometry process technologies and in achieving
higher levels of design integration; the risks and uncertainties associated with
our international operations; our ability to retain and hire key executives,
technical personnel and other employees in the numbers, with the capabilities,
and at the compensation levels needed to implement our business and product
plans; changes in our product or customer mix; the quality of our products and
any remediation costs; the effects of natural disasters and other events beyond
our control; the level of orders received that can be shipped in a fiscal
quarter; potential business disruptions, claims, expenses and other difficulties
resulting from residual "Year 2000" problems in computer-based systems used by
us, our suppliers or our customers; general economic conditions and specific
conditions in the markets we address; and other factors.
4
<PAGE> 5
Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form
10-Q, recent Current Reports on Forms 8-K and 8-K/A, and other Securities and
Exchange Commission filings discuss some of the important risk factors that may
affect our business, results of operations and financial condition. We undertake
no obligation to revise or update publicly any forward-looking statements for
any reason.
Broadcom(R), StrataSwitch(TM), Content Aware(TM) and the pulse logo are
trademarks of Broadcom Corporation and/or its affiliates in the United States
and certain other countries. Allayer Communications is a trademark of Allayer
Communications in the United States and certain other countries. All other
trademarks mentioned are the property of their respective owners.
5
