Emulex Drops Cash for Vixel

Host bus adapter vendor Emulex Corp. (NYSE: ELX) today said it has agreed to acquire embedded Fibre Channel switch maker Vixel Corp. (Nasdaq: VIXL) in an all-cash deal worth around $310 million (see Emulex to Acquire Vixel for $310M).

Vixel was one of the early players in the Fibre Channel fabric switch market but had fallen behind Brocade Communications Systems Inc. (Nasdaq: BRCD). Last year, Vixel repositioned itself as a provider of embedded switches for internal RAID array connectivity.

That shift in gears evidently has paid off for the Bothell, Wash.-based Vixel: Emulex is paying $10 per share to buy the company, a 17 percent premium over Vixel's closing price of $8.54 per share today.

Emulex says Vixel's InSpeed embedded storage switching products complement Emulex's existing original equipment manufacturer (OEM) business model and HBA products.

"A key objective for the acquisition is to accelerate Emulex's revenue growth by tapping into the incremental market for embedded storage switching solutions," said Paul F. Folino, chairman and CEO of Emulex, in a statement.Vixel's InSpeed storage switching business has grown at double-digit rates sequentially over the past four reported quarters. The company has landed 13 OEMs, which include Apple Computer Inc. (Nasdaq: AAPL), BlueArc Corp., Fujitsu Ltd. (OTC: FJTSY), Hewlett-Packard Co. (NYSE: HPQ), NEC Corp. (Nasdaq: NIPNY), Network Appliance Inc. (Nasdaq: NTAP), and Xyratex (see Can Vixel Get Rich in Switch Niche?).

Emulex says it expects to provide formal pro forma guidance on the effect of the Vixel acquisition after the deal closes.

Also today, Emulex affirmed guidance for its first fiscal quarter, which ended September 2003. The company previously had said it expects to report earnings per share of 23 cents on revenues of between $82 million and $85 million for the quarter (see Emulex Enthused by Q4 Results).

Todd Spangler, US Editor, Byte and Switch