Mobile device and TV chip maker Broadcom said on Monday it plans to buy Advanced Micro Devices’ (NYSE: AMD) digital television chip business for $192.8 million in cash, to expand into the low-end television screen market.
Broadcom (NASDAQ: BRCM) makes chips for mobile phones, network equipment and a range of consumer electronics, and has previously focused on mid-tier and high-end television chips.
The deal, which is expected to close in the fourth quarter of this year, is expected to cut Broadcom’s full year 2009 net earnings per share by a range 4 cents to 5 cents, including 2 cents of stock based compensation.
It expects the deal to approach earnings neutrality by the fourth quarter of 2009. Broadcom also said said that boards of each company had approved the deal, which does not require a shareholder vote at either company but does require regulatory approval.
AMD, which trails behind far-larger rival Intel (NASDAQ: INTC) in market share, has reported seven straight quarterly net losses and is developing a new strategy for manufacturing, which also lags behind Intel.
Broadcom said it would ask 530 AMD employees to the company. Of those employees, 90 percent are engineers.
The company also said it may record a one-time charge for purchased in-process research and development expenses related to the acquisition in the quarter in which the transaction closes but said the amount, if any had yet to be determined.
Broadcom shares were down 72 cents to $26.70 in morning trading on NASDAQ. AMD shares rose 10 cents to $5.91.
