News

28 August 2008

 

Avago prepares $400m IPO on NASDAQ

Singapore-registered Avago Technologies Ltd has filed a registration statement with the US Securities and Exchange Commission (SEC) for an initial public offering (IPO) of its common stock worth up to $400m. Avago has applied for quotation of its ordinary shares on NASDAQ under the symbol ‘AVGO’.

Avago designs and manufactures analog IC and optical devices for the industrial and automotive electronics, wired infrastructure, wireless communications, and consumer and computing peripherals markets (focusing on III-V based products). Its portfolio of about 7000 products includes RFICs, LED displays, color sensors, optical and laser mouse sensors, and optical telecoms transmitter and receiver modules as well as transceivers. Customers include Cisco, HP, IBM, LG Electronics, Logitech, Motorola, Samsung and Sony Ericsson Mobile Communications.

The business began as part of Hewlett-Packard in 1961. In 1999 it became the semiconductor products group of spin-off Agilent Technologies Inc. In 2005 it was acquired for $2.66bn in a leveraged buy-out by private-equity firms Kohlberg Kravis Roberts and Co (KKR) and Silver Lake Partners, which own a combined stake of 80.9%. Other shareholders include Seletar Investments (10.6%) and Geyser Investment (7.1%). The firm was subsequently renamed Avago.

To reduce debt related to the buy-out, Avago has sold off several units, including its printer ASIC chip division to Marvell Technology Group Ltd in 2006 for $275m and its storage chip division to PMC-Sierra Inc in 2007 for $425m.

For continuing operations, Avago reported a loss of $227m on sales of $1.4bn for fiscal 2006 (to end-October) and a loss of $159m on sales of $1.53bn for fiscal 2007. Revenue from products targeted at the wireless communications market grew as Avago focused on changing its product mix towards more proprietary products, says the firm. Revenue from products targeted at the industrial and automotive electronics market experienced moderate growth, driven by fiber optics in the automotive market offset by weaker optocoupler and LED sales.

For fiscal first-half 2008 (ending 4 May), Avago made a profit of $21m on revenue of $813m (compared to just $10m on revenue of $755m a year ago). However, long-term debt remains $710m.

Besides improving its bottom line, Avago says it is moving towards a fab-lite model. The firm already outsources most manufacturing for certain types of chip (i.e. silicon), using external wafer foundries including Singapore’s Chartered Semiconductor Manufacturing Ltd and Taiwan Semiconductor Manufacturing Company Ltd (TSMC) and third-party contract manufacturers for assembly & test, including Amertron Inc, Amkor Technology, and the Hana Microelectronics Public Company Ltd group of companies. However, Avago owns manufacturing facilities, in particular in Fort Collins, CO, USA and Singapore for III-V based LEDs and RFICs. The firm also has two design facilities in the USA (California and Colorado), three in Europe (Germany, Slovakia and Italy), and four in Asia (Singapore, South Korea and Malaysia).

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Visit: www.avagotech.com