2012

STEP STRATEGY ADVISORS Elad A. Rosenberg eladrose@gmail.com

[BROADCOMS ACQUISITIONS ANALYSIS]

BROADCOMS ACQUISITIONS ANALYSIS

SC Square Ltd, Israel - Broadcom provides system-on-a-chip and embedded software solutions to manufacturers of computing and networking equipment, digital entertainment, broadband access products, and mobile devices. - SC Square provides security services for passports, health cards, and credit cards as well as debits cards. - The acquisition of SC Square will allow Broadcom to offer more security solution, which is an essential ingredient across its platforms. Provigent, Israel - Broadcom provides one of the industry's broadest portfolios of Ethernet networking solutions for service provider infrastructure including the mobile backhaul. - The acquisition of Provigent helped Broadcom expand its robust portfolio to more thoroughly address the $5B microwave backhaul equipment business Percello, Israel - Percello develops system-on-a-chip (SoC) solutions for femtocells. Femtocells are small, low power cellular base stations that extend coverage indoors where signals are weak. - According to market research company Infonetics Research Inc. the femtocell base station market is forecast to be worth $1 billion in 2013 and triple to reach $3 billion in 2015. - Broadcoms acquisition of Percello is significant in three ways: It validates the fledgling femtocell market; it presents a very plausible scenario for femtocell integrated in a broadband gateway box; and it shows the future of femtocells potentially priced on par with Wi-Fi. The acquisition of Percello is expected to enable Broadcom to lower overall bill of material cost and accelerate the time to market for best-in-class and energy-efficient femtocell technology. Dune Networks, Israel - Dune Networks has developed a chip set that can handle data transfer speeds of 100 gigabits per second per port. The chip can potentially be used in switching equipment for data centers with thousands of servers. The need to manage data traffic based on surfer demand arose with the development of cloud computing, involving huge physical server farms to provide storage with processing performed on the Internet. - The acquisition of network switching for data centers will enable Broadcom to meet increasing demand for cloud computing infrastructure. Looking forward Broadcom will have to compete with Marvel, which also had a staked in Dune and Fulcrum Microsystems. Beceem, U.S.A - Beceem Communications sells WiMax handset chips and has a multimode WiMax and LTE chip in development. - With the acquisition of Beceen, Broadcom is set to add as much as $100 million to its 2011 revenues, although not likely to add profits. The acquisition is a logical one as Broadcom sees the market changing and moving forward towards 4G technology. Having WiMax products as well as LTE solutions will become more critical as service providers that are deploying WiMax today, decide later to follow the tide toward LTE. - Looking forward on the competition, LTE players include Intel--through its recent acquisition of Infineon's wireless group--as well as ST-Ericsson and MediaTek. Teknovus, U.S.A - Ethernet passive optical networking (EPON) is a technology providing broadband services at up to 10 Gigabits per second over fiber optic cables. - Infonetics Research estimates the worldwide market for PON systems will hit $4.5 billion in 2013 driven by IPTV systems such as those of AT&T and Verizon. - Broadcoms acquisition come as carriers are increasingly looking at PON technology as a way to leapfrog each other by delivering fast optical connections to the home as an alternative to copper-based digital subscriber lines. Today Broadcom has switching, DSL, GPON, and cable solutions in the service provider segment that span from the access to the core of the network. Teknovus' products will add a key element to Broadcoms existing service provider offering and will help Broadcoms become increasingly competitive. Gigle Networks, Spain - Gigle offers power line networking technology that is Home Plug AV certified and is designed to be compliant with the IEEE 1901 standard for high-speed power line communications. - The acquisition of Gigle complements Broadcom's portfolio of wired and wireless solutions for the home. It should allow Broadcom offer additional functionality in set-top box, broadband carrier access and wireless router applications.

BROADCOMS ACQUISITIONS ANALYSIS

With the addition of Gigle Networks power line technology, and Broadcom's ability and extensive experience in supporting the multiple methods to connect devices including Ethernet, Wi-Fi, MoCA and DLNA, Broadcom is able to offer service providers and device manufacturers a variety of ways to deploy a whole-home connected environment

Innovision Research & Technology, United Kingdom - Innovision Research & Technology engages in the design of near-field data communications and radio-frequency identification (RFID) solutions, focusing on the development and licensing of custom integrated circuits. - Broadcom acquisition indicates its thought that NFC will find increasing acceptance in smart phones and other mobile devices. The technology is expected to become a valuable part of the wireless connectivity portfolio alongside other technologies such as Bluetooth, Wi -Fi, FM and GPS. What the Future Holds? NetLogic Microsystems, U.S.A NetLogic Microsystems delivers a range of semiconductor solutions. NetLogic focuses on designing advanced processors embedded in routers, which rapidly analyze data for quality and security issues. - With the acquisition, Broadcom expands its infrastructure portfolio with a number of new product lines and technologies, including knowledge-based processors, multi-core embedded processors, and digital front-end processors. - Broadcom will also get to increase its international exposure, as NetLogic has a significant presence in China, a market that is fast building out its communications infrastructure. - Looking at the competition, Qualcomm is set to acquire Atheros, another networking equipment company, for $3.1 billion. Company Acquired Date of Acquisition Location CEO Acquisition Cost (In millions) Industry SC Square Ltd May, 2011 Israel Jacob Mendel 41.9 Provigent April, 2011 Israel Dan Charash 313 Gigle Networks Inc. December, 2010 Spain Juan Carlos Riveiro 75 Beceem Communications Noember, 2010 U.S.A Surendra Babu Mandava 316

software security

semiconductors for microwave backhaul systems Teknovus

system-on-achip (SoC)

system-on-achip (SoC)

The Company

Percello Ltd.

Dune Networks

Innovision Research & Technology PLC July, 2010 United Kingdom David Peter Wollen Near-field data communication (NFC)

Year of Acquisition Location CEO $ Industry

Noember, 2010 Israel Shlomo Gadot 86 system-on-a-chip (SoC)

March, 2010 Petaluma, CA Greg Caltabiano $123 Ethernet Passive Optical Network (EPON) chipsets and software.

December, 2009 Israel Eyal Dagan $178 million switch fabric solutions for data center networking equipment.