Broadcom Ltd. Ratings Are Unaffected By Its Plan To Acquire Brocade

NEW YORK (S&P Global Ratings) Nov. 3, 2016--S&P Global Ratings said today that Singapore-based semiconductor manufacturer Broadcom Ltd.'s (BB+/Positive/--) announcement that it intends to acquire San Jose, Calif.-based communications equipment provider Brocade Communications Systems Inc. for approximately $5.9 billion has no immediate impact on our ratings on Broadcom. Broadcom has indicated its intention to retain Brocade's fiber channel storage area network (SAN) switching business, which we expect will complement Broadcom's existing enterprise networking and storage businesses. This segment had revenue of about $1.4 billion for the 12 months ended Sept. 30, 2016, a mid-single-digit percentage decline from the same period the previous year, and we expect the business will continue to have limited growth prospects despite high gross margins (currently

...NEW YORK (S&P Global Ratings) Nov. 3, 2016--S&P Global Ratings said today that Singapore-based semiconductor manufacturer Broadcom Ltd.'s (##+/Positive/--) announcement that it intends to acquire San Jose, Calif.-based communications equipment provider Brocade Communications Systems Inc. for approximately $5.9 billion has no immediate impact on our ratings on Broadcom. Broadcom has indicated its intention to retain Brocade's fiber channel storage area network (SAN) switching business, which we expect will complement Broadcom's existing enterprise networking and storage businesses. This segment had revenue of about $1.4 billion for the 12 months ended Sept. 30, 2016, a mid-single-digit percentage decline from the same period the previous year, and we expect the business will continue to have limited growth prospects despite high gross margins (currently above 65%). The company expects to divest Brocade's lower margin Internet Protocol networking segment, which has exhibited mid-single-digit...

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