PMC-Sierra expects Q1/06 business results in-line with mid-quarter update provided Feb 27/06.
SANTA CLARA, Calif.--(BUSINESS WIRE)- PMC-Sierra, Inc. (NASDAQ: PMCS), a leading provider of broadband communications and storage semiconductors, today announced that it has entered into a definitive agreement to acquire Passave Inc., a leading developer of system-on-chip semiconductor solutions for the Fiber To The Home (FTTH) access market. Based on analyst estimates and service provider announcements, it is estimated that between 45 and 60 million homes worldwide will be connected using Passive Optical Networking (PON) technology by 2010. The acquisition price of approximately $300 million is expected to be paid through the issuance of PMC-Sierra common stock. The deal is expected to close within April 2006 and is conditioned upon the receipt of normal governmental rulings. PMC-Sierra expects the acquisition will be neutral to earnings in the near term and accretive in three quarters based on expected revenue growth.
"Our acquisition of Passave brings PMC-Sierra an experienced and highly innovative team with clear market share leadership in Passive Optical Networking solutions. This acquisition fits with our strategic intent to address the high-growth Fiber Access market and is aligned with PMC's developments in Customer Premises Equipment," said Bob Bailey, Chairman and CEO. "PON is the ultimate Triple Play access technology and is key to the build-out of the second generation FTTH-based broadband infrastructure."
Passave's solutions enable Service Providers to offer so-called "Triple Play" services (voice, video and data) at up to 1Gbps over PON-based equipment. The Passave product line includes system-on-chip solutions for Optical Line Terminals (OLTs) for the Central Office, Optical Network Terminals (ONTs), and Optical Network Units (ONUs) solutions for residential termination equipment. Passave has delivered two million ONU devices that have been deployed in NTT's Fiber To The Home broadband access network.
"FTTH is a key enabler for Triple Play and Digital Home applications. As these significant opportunities unfold worldwide, we are excited to join forces with a public company with such an established international presence in the communications semiconductor market," said Victor Vaisleib, CEO of Passave. "There are natural synergies between our products, technologies and channels, and PMC-Sierra's capabilities will enhance the product offering, quality and support we are offering our customers," he added.
Passave employs approximately 150 employees worldwide and has facilities in Herzliya, Israel; Santa Clara, California; and Tokyo, Japan; and regional sales offices in Korea and China.
First Quarter 2006 Business Update
On February 27, 2006, PMC-Sierra's revenue outlook for the First Quarter of 2006 was expected to be in the range of $85 to $88 million as provided on the Company's mid-quarter update conference call. The revenue range provided at that time was based on the outlook for PMC-Sierra's existing business (revenue range: $78 to $80 million) as well as its recently acquired storage semiconductor business (revenue range: $7 to $8 million). As of this date, the Company expects the business results for the First Quarter to be in-line with the outlook provided on February 27, 2006.
Conference Call on April 4, 2006
Management will be hosting a webcast conference call today, April 4, at 2:00 p.m. PDT that will be accessible on the Company's website under the Financial Events and Calendar section at http://investor.pmc-sierra.com/. To listen to the conference call live by telephone, dial 913-981-4905 approximately ten minutes before the start time. A telephone playback will be available after the completion of the call and can be accessed at 719-457-0820 using the access code 5860433. A replay of the webcast will be available for five business days.
Safe Harbor Statement
PMC-Sierra's forward-looking statements regarding PON market growth, closing of the transaction and the transaction's effect on PMC-Sierra's earnings per share, involve risks and uncertainties. Actual results may differ from projections for varied reasons. Projected market growth in FTTH from an estimated four million subscribers in 2005 is dependent upon many factors including service provider capital expenditures, consumer adoption of FTTH-based services and government policy. The timing of developments in the North American PON market is less certain than in Asian markets. The transaction's closing date depends on Israeli government approvals and other customary conditions. Whether and when the transaction becomes accretive depends on growth in both Passave's and PMC-Sierra's business. Both companies' financial results can be affected by a wide range of risks detailed in PMC-Sierra's Securities and Exchange Commission filings, including changes in semiconductor market conditions, demand for semiconductor products, the level of orders that are placed and shipped within the quarter, the impact of competitive products and pricing, and technological and product development risks. PMC-Sierra does not undertake any obligation to update the forward-looking statements.
PMC-Sierra(TM) is a leading provider of high-speed broadband communications semiconductors, storage semiconductors and microprocessors for enterprise, access, metro, storage, wireless infrastructure, laser printers and customer premises equipment. The company offers worldwide technical and sales support, including a network of offices throughout North America, Europe and Asia. The company is publicly traded on the NASDAQ Stock Market under the PMCS symbol and is included in the S&P 500 Index. For more information, visit www.pmc-sierra.com.
About Passave Inc.
Passave is a leading supplier of gigabit FTTH (Fiber To The Home) semiconductors for the broadband access network. Passave FTTH products use the field-proven GigaPASS(TM) FTTH architecture to provide the bandwidth and feature sets that enable service providers to deliver Triple Play services -- integrated data, IPTV and voice -- over Passive Optical Networks. The GigaPASS architecture integrates Gigabit PON to Ethernet interfaces, wire-speed protocol processing and programmable features, delivering high-performance, low-cost FTTH solutions. Passave's system-on-chip FTTH solutions are open-source software platforms with flexible hardware features giving system OEMs the ability to differentiate their products with application-specific features. Passave maintains offices in Santa Clara, California, Herzliya, Israel, Tokyo, Japan and Seoul, Korea, with customer support teams in China. For more information about Passave, visit www.passave.com. For white papers on Fiber To The Home and Passive Optical Network solutions, visit http://www.passave.com/tech_whitepapers.cfm
C) Copyright PMC-Sierra, Inc. 2006. All rights reserved. Tachyon is a registered trademark of PMC-Sierra, Inc. PMC, PMCS, PMC-Sierra, and "Thinking You can Build On" are trademarks of PMC-Sierra, Inc. All other trademarks are the property of the respective owners.
Alan Krock, 408-988-1204
David Climie, 408-988-8276
Susan Shaw, 408-988-8515
SOURCE: PMC-Sierra, Inc