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Qualcomm buys Atheros Communications for $3.1 billion

The deal will help the chipmaker expand beyond the cellphone market into smart phones and tablet computers.

January 06, 2011|By Abby Sewell, Los Angeles Times

In a quest to move beyond cellphone technology, chipmaker Qualcomm Inc. has agreed to acquire Atheros Communications Inc. for $3.1 billion in cash.

Qualcomm will pay $45 per share under the terms of the deal with Atheros, which makes Wi-Fi chipsets for computers and mobile devices. The proposal has been approved by the boards of both companies and is expected to close in the first half of 2011. The acquisition is the largest in Qualcomm's history.

Atheros will be renamed Qualcomm Networking & Connectivity. Its chief executive, Craig Barratt, will remain with the San Jose company. Atheros spokeswoman Molly Mulloy said Wednesday it was too early to say whether any employees will be laid off.

Qualcomm representatives said in a conference call that the acquisition will allow the San Diego company, which currently focuses on cellular technology, to expand into consumer electronics, networking and computing. This could give the company more access to the smart-phone and tablet markets.

"This acquisition makes sense on a lot of levels," Qualcomm Chief Executive Paul Jacobs said in the conference call. "From a vision standpoint, we believe communications capabilities will go into more and more devices in the world around us and the phone will be used to interact with those devices."

Jim Kelleher, senior analyst with Argus Research, called the acquisition a good move for Qualcomm.

He said in a statement that the move would allow the company to get into devices that will become "pervasive in the home, the enterprise, and networking infrastructure."

Qualcomm's healthy balance sheet would lower its risk from the large purchase, Kelleher said.

Qualcomm projected that the acquisition would mildly boost its earnings per share in the 2012 fiscal year.

On Wednesday, Qualcomm shares rose 2% to $52.03 and Atheros' rose 1.5% to $44.64.

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