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EXHIBIT 99.1
NEWS RELEASE
BROADCOM BUSINESS MEDIA CONTACTS BROADCOM FINANCIAL ANALYST CONTACT
Bill Blanning or Eileen Algaze William Ruehle
Corporate Communications Department Vice President and Chief Financial Officer
949-585-5555 or 949-585-5971 949-450-8700
[email protected] [email protected]
[email protected]
SERVERWORKS CONTACT
David Pulling
Vice President of Marketing and Sales
408-492-1915
[email protected]
BROADCOM TO ACQUIRE SERVERWORKS,
A LEADING SUPPLIER OF HIGH-PERFORMANCE SYSTEMI/O(TM) SOLUTIONS FOR
SERVER AND STORAGE PLATFORMS, NETWORK APPLIANCES AND WORKSTATIONS
Direct Access to the CPU and Memory Subsystem Bandwidth Will Enable
Broadcom to Deliver Connectivity Solutions that Significantly Improve
Internet and Intranet Response Time for Every User Worldwide
IRVINE and SANTA CLARA, Calif. - January 8, 2001 - Broadcom Corporation (Nasdaq:
BRCM), the leading provider of integrated circuits enabling broadband
communications, today announced that it has signed a definitive agreement to
acquire ServerWorks Corp., the world's leading independent supplier of
high-performance system input/output (I/O) integrated circuits for servers.
ServerWorks' SystemI/O(TM) silicon solutions act as the essential conduits for
delivering high-bandwidth data in and out of servers, and coordinating all I/O
transactions within the server platform including between external I/O, the main
system memory and the CPUs.
The merger transaction has a value of about $957 million. The acquisition is
expected to be accretive to Broadcom's diluted earnings per share to the extent
of approximately $.02 to $.03 per share per quarter throughout 2001 on a pro
forma reporting basis.
ServerWorks has design wins with almost every leading manufacturer of
Intel-architecture (IA)-based servers worldwide. These server platforms are used
in the markets for web servers, data center servers, network attached storage
(NAS), storage area networks (SANs), and high performance workstations.
ServerWorks has successfully delivered four generations of System I/O solutions
for IA-based server platforms and has shipped more than 10 million devices since
inception. Its products have been adopted by most of the leading server, storage
and workstation manufacturers, including
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CacheFlow, Cisco Systems, Compaq, Dell, DigitalScape, EMC, Fujitsu, HP, Hitachi,
IBM, Intel, Lucent, Maxtor, NEC, Network Appliance, Nortel Networks, Quantum
Snap, Siemens, SGI, Stratus and VA Linux.
The addition of ServerWorks' product portfolio and system expertise will enable
Broadcom to deploy wire-speed 10 Gigabit per second (Gbps) communications
topologies such as InfiniBand, Ethernet and Fibre Channel into server and
storage platforms, and expand Broadcom's participation in these markets. 10Gbps
is anticipated to be the speed at which local area, wide area and storage area
networks converge.
"ServerWorks' impressive customer base, coupled with its aggressive technology
roadmap and proven track record, will enable Broadcom to enhance the entire
Internet and Intranet infrastructure," said Dr. Henry T. Nicholas III, President
and CEO of Broadcom. "This acquisition is very strategic to our mission of
delivering end-to-end broadband solutions for higher-speed Internet and
e-business connectivity. Broadcom's networking technology in combination with
ServerWorks' SystemI/O solutions will alleviate the congestion occurring both to
and within the servers and storage devices through which all forms of Internet
traffic pass. This has the potential to affect every "click" of every Internet
user - worldwide - by speeding up the response time of endpoint server and
storage devices."
"The server's job is to provide compute power and storage to many users
simultaneously, so the I/O and networking technology are essential elements to
assure optimal system performance," said Raju Vegesna, President and CEO of
ServerWorks. "The combination of Broadcom and ServerWorks provides a unique
opportunity to innovate, integrate, and enable users to unlock the full
potential of Intel's high performance processor family."
Upon completion of the acquisition, Mr. Vegesna will become Vice President and
General Manager of Broadcom's ServerWorks Business Unit, which will operate as a
wholly-owned Broadcom subsidiary based in Santa Clara.
Servers are critical networking devices for the manipulation and storage of data
in enterprise networks and overall Internet infrastructures. The explosive
growth of the Internet, comprised of millions of interconnected servers and
storage devices, has driven a corresponding acceleration in demand for I/O
bandwidth. New high-speed networking technologies, such as 10 Gigabit Ethernet,
InfiniBand and Fibre Channel, are placing yet higher demands on I/O and memory
bandwidth of these systems. Further compounding this problem, all Internet
network elements require extremely high reliability and fault tolerance.
According to Dean McCarron of Mercury Research, the traditional server and
workstation market continues to experience over 50% annual unit growth rate.
Roger Cox, Chief Analyst, Gartner Dataquest, is forecasting that external
storage units based on SAN and NAS architectures will realize a compound annual
growth rate (CAGR) of over 100% percent from 1999 to 2004.
ServerWorks' primary product offering is a family of devices that addresses a
wide range of memory and I/O requirements for server and storage platforms,
network appliances and workstations. The primary challenge in every new
generation of server and storage design is to optimize the overall platform
performance, by balancing higher processor speeds with increasing overall system
and I/O bandwidth. ServerWorks has taken a leadership role in driving major
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server technology initiatives and enhancing overall system performance, such as
PCI-X and high-bandwidth memory technologies. Further, the company partnered
with IBM to co-develop and integrate MXT(TM), an advanced lossless memory
expansion technology. Next generation DirectI/O(TM) solutions from ServerWorks
will integrate high performance value-added networking technologies directly
into the memory subsystem, which will enable next generation server and storage
platforms to process large amounts of data reliably and at full wire speed.
In connection with the acquisition, Broadcom will issue approximately 11 million
shares of its Class A common stock in exchange for all outstanding shares of
ServerWorks common stock and upon exercise of outstanding employee stock
options, warrants and other rights of ServerWorks. These shares have a value of
approximately $957 million based upon the closing price of Broadcom Class A
common stock on the Nasdaq National Market on January 5. Up to approximately 9
million additional shares of Broadcom Class A common stock will be reserved for
future issuance to the stockholders and option and warrant holders of
ServerWorks upon satisfaction of certain performance goals. 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 ServerWorks' stockholders 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
first fiscal quarter, ending March 31, 2001.
Broadcom reports net income and diluted earnings per share on a pro forma basis
which excludes in-process research and development expenses, amortization of
goodwill and purchased intangibles, stock-based compensation expenses, and
payroll taxes on certain stock option exercises.
ABOUT SERVERWORKS
ServerWorks Corp. is the world's leading independent supplier of
high-performance system input/output (I/O) integrated circuits for servers.
ServerWorks' SystemI/O(TM) silicon solutions, which are used pervasively by
leading original equipment manufacturers, act as the essential conduits for
delivering high-bandwidth data in and out of servers, and coordinating all I/O
transactions within the server platform including between external I/O, the main
system memory and the CPUs. See www.serverworks.com for more information.
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.
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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,"
"potential" and "enable" 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 ServerWorks Corp. 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; general economic
conditions and specific conditions in the markets we address; the rate at which
present and future customers and end-users adopt Broadcom's and ServerWorks'
technologies and products in the markets for high-performance system I/O and
networking products; delays in the adoption and acceptance of industry standards
in the foregoing markets; changes in ServerWorks' relationships with Intel
Corporation; the timing of customer-industry qualification and certification of
our respective 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 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 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 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 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 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; and other
factors.
Our Annual Report on Form 10-K, 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
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condition. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.
Broadcom(R) and the pulse logo are registered trademarks of Broadcom Corporation
and/or its affiliates in the United States and certain other countries.
ServerWorks, SystemI/O(TM) and DirectI/O(TM) are trademarks of ServerWorks Corp.
in the United States and certain other countries. Intel(R) is a trademark of
Intel Corporation. MXT(TM) is a trademark of IBM Corporation. All other
trademarks mentioned are the property of their respective owners.
