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10/23/2012 5:41 AM
Qualcomm/Atheros Deal Close – Messaging/Q&A
May 24, 2011
Key Messages
Our comprehensive industry-leading connectivity and networking portfolio will help accelerate
the expansion of Qualcomm’s presence in existing businesses and provide access to significant
new business opportunities with additional products and channels. The unparalleled combination
of our technologies will provide rich and complete platforms that enable Qualcomm’s customers
to deliver more compelling user experiences, accelerate time-to-market and expand their
footprint.
Market expansion beyond mobile:
Atheros’ complementary product portfolio, sales channels, and leadership in the networking,
computing and CE segments provides an opportunity for Qualcomm to expand beyond its core
mobile business into new business opportunities with additional products and channels,
representing an incremental and growing global TAM.
Brings two global leaders together:
This acquisition combines the technology strength and leadership of Qualcomm in mobile
platforms and WAN technology, with the technology strength and leadership of Atheros in LAN
connectivity.
Commitment to innovation (Team strength and culture fit):
Qualcomm and Atheros share engineering-focused cultures with demonstrated execution
capabilities and proven track records in developing technologies that help our customers deliver
the most compelling products and user experiences.
Global scale and reach:
Qualcomm and Atheros have complementary customer relationships around the world, with
particular strength in high-growth businesses. This enables Qualcomm to leverage the
engineering expertise and investments of both companies across expanding businesses.
Leveraging the combined scale of two fabless semiconductor leaders will increase our ability to
deliver high-performance products quickly, at high volume, and at great value.
Rich customer solutions:
Our complementary strengths will allow the combined company to provide unparalleled benefits
to our customers, in terms of breadth of offering, differentiation, customer support, integration,
performance, and value.
Customer focus:
Qualcomm and Atheros both focus on making their customers successful. This customer focus
will continue to be at the center of all activities at the two companies, including product
planning, sales, technical support and co-marketing.
Key Takeaways
Financial Implications
o Accounting is not yet finalized;
o On a Non-GAAP basis we estimate that the acquisition will be modestly dilutive to
earnings per share in fiscal 2011 and modestly accretive in fiscal 2012, consistent
with our previous forecasts.
o In addition, based on preliminary estimates, we expect the transaction to be further
dilutive to GAAP earnings by approximately $0.09 to $0.13 per share for the
remainder of fiscal 2011 driven primarily by certain near-term purchase accounting
charges and secondarily by ongoing share-based compensation expense.
These near-term purchase accounting charges result from the requirement in
ASC 805 to record acquired inventory and backlog at fair value at the time of
acquisition, which will result in reduced margin contribution as inventory and
backlog as of the acquisition date are converted to revenues over the
remainder of fiscal 2011.
o Reporting of Qualcomm Atheros results:
Will be reported as part of the QCT Segment
We have a long history of providing useful information to investors and will
continue to follow this philosophy. We aren’t making specific disclosures in
this regard at this time.
o Funded primarily with onshore cash
As we had previously mentioned, we have been evaluating the use of offshore
and onshore cash for the transaction. Based on further analysis and an
evaluation of the complexity and potential costs of using offshore cash, we
decided that it is optimal for QC to use onshore cash for the transaction.
In addition, we are encouraged by the improved prospects of legislation that
will reform the corporate tax code and eliminate the large tax cost for
companies to repatriate foreign earnings.
Given our strong US cash position, using US cash will not impact our ability
to fund our normal US operations and dividend and stock repurchase
programs.
Organizational Implications
o Atheros is now Qualcomm Atheros, Inc. (QCA internally)
o Is led by Craig Barratt, former Atheros President and CEO, who reports to Steve
Mollenkopf
o Focused on growing the business, do not expect workforce or product-line reductions
to be central to achieving our valuation expectations.
o Includes QCT WLAN, GPS, BT, FM assets
Deal Rationale/Key Messages
o Leading connectivity and networking company with great people, products and a
solid track record of execution in their existing businesses
Complementary products and customer channels
o Accelerates expansion of our technologies and platforms to solutions for products
beyond cellular (i.e. computing, consumer electronics, and networking)
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The combination allows complementary technologies to be brought together
to provide systems solutions for existing and new opportunities
o Ability to enhance Atheros’ product roadmap by providing QC technology portfolio –
e.g. leadership in GPS, processing, etc.
o Longstanding partnership, similar engineering cultures
About Atheros
o Leader in wired and wireless connectivity technologies
o Key Products: WLAN, Ethernet, BT, GPS, PON, PLC
We have not announced or discussed any changes to our respective roadmaps.
We continue to assess the opportunities and will announce associated product
plans in due course.
o Key Opportunities: Networking (51%), Consumer (26%), PC (23%)
o Key Customers
Computing: All top 10 PC OEMs
Consumer: Nintendo, Sony, Samsung, Vizio
Networking: NETGEAR, TP Link, Cisco, D-Link, Devolo, ZTE
Service Providers: Dish Networks, Free, France Telecom, SFR, etc.
o 1900 employees, ~$950M Annual Sales last 12 months
Key Potential Investor Questions & Answers
Q: Why acquire Atheros and why now?
• Inflection point in the industry
• Business expansion opportunity
• Smartphone bleeding into mobile computing and other consumer electronics
• Growing importance of technology integration and platform solutions
Q: Lower margin business / More competitive space / Commodity products?
• Business expansion opportunity into new and different product groups
• Enables Qualcomm to compete beyond each of our existing product lines and
across product groups with platform / systems sales
• Significant scale benefits over time
Q: Is Qualcomm Wi-Fi technology unsuccessful? Are you solving for failure?
• This accelerates Qualcomm’s entry into new product groups, doesn’t replace
existing solutions
• Remain committed to announced integrated solutions
Q: What is the incremental TAM created?
• Acquisition is about the new opportunities we can create together not about
adding their TAM to ours
Q: What are the synergies? Headcount reductions?
• Acquisition is about expansion, not headcount or cost synergies
• Focused on growing the business, do not expect workforce reductions to be
central to our strategy, however, redundant positions are a possibility
• Scale benefits over time
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Q: Why confident on ability to integrate?
• Long history of working together, deliver products together today
• Excellent leadership and common cultures
Q: Is going after Broadcom a good strategy?
• Acquisition is not about going after one competitor, but better serving new and
existing customers
• Both Atheros and Qualcomm already do well on own
• Unique combined product portfolio
Q: What guidance points will you be providing?
• QCA will fold into our QCT segment, which we will continue to report
• We have a history of providing useful information to investors and will continue
to follow this philosophy. We aren’t making specific disclosures in this regard at
this time.
General and Deal Rationale
Q1: Why did Qualcomm acquire Atheros?
A: Our comprehensive industry-leading connectivity and networking portfolio will help
accelerate the expansion of Qualcomm’s presence in existing businesses and provide access to
significant new business opportunities with additional products and channels. The combination
of our technologies will provide rich and complete platforms that enable our customers to deliver
more compelling user experiences, accelerate time-to-market and expand their footprint.
Q2: Who is Atheros (now part of Qualcomm Atheros, Inc.)?
A: Qualcomm Atheros is now a wholly owned subsidiary of Qualcomm. It is a leading provider
of wireless and wired technologies for the mobile, networking, computing and consumer
electronics markets.
It offers its global customer base high-performance, end-to-end solutions, featuring Wi-Fi®,
GPS, Bluetooth®, FM, Ethernet, HomePlug™ Powerline and PON technologies. By leveraging
substantial expertise in RF, signal processing, software and networking Qualcomm Atheros can
deliver highly-integrated, low-power, system-level solutions designed to enable developers to
create high-performance, differentiated products.
Q3: What products does Atheros sell and how do they fit with Qualcomm’s portfolio of
cellular products?
A: Atheros’ product portfolio includes solutions for WLAN (also referred to as Wi-Fi), Ethernet,
Bluetooth, Global Positioning System (GPS), Powerline Communications (PLC) and Passive
Optical Networking (PON). This acquisition combines the technology strength and leadership of
Qualcomm in mobile platforms and WAN technology, with the technology strength and
leadership of Atheros in LAN connectivity. This combination will provide rich and complete
platforms that enable Qualcomm’s customers to deliver more compelling user experiences,
accelerate time-to-market and expand their footprint. Leveraging the combined scale of two
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fabless semiconductor leaders will increase our ability to deliver high-performance products
quickly, at high volume and at great value.
Q4: What are the terms of the deal?
A: We are purchasing all of the company’s common stock for $45 per share in cash, for
approximately $3.1 billion, enterprise value.
Q5: What synergies are you hoping to achieve in this deal?
A: This acquisition combines the technology strength and leadership of Qualcomm in mobile
platforms and WAN technology, with the technology strength and leadership of Atheros in LAN
connectivity. Qualcomm and Atheros share engineering-focused cultures with demonstrated
execution capabilities and proven track records in developing technologies that help our
customers deliver the most compelling products and user experiences. We have complementary
customer relationships around the world, with particular strength in high-growth businesses. The
combination enables Qualcomm to leverage the engineering expertise and investments of both
companies across expanding businesses. Leveraging the combined scale of two fabless
semiconductor leaders will increase our ability to deliver high-performance products quickly, at
high volume and at great value.
Q6: Why did Qualcomm buy a lower margin business?
A: This acquisition was focused on enabling expansion for Qualcomm beyond cellular (i.e.
computing, consumer electronics, and networking) by adding to its suite of best-in-class
technologies. Qualcomm currently provides semiconductor products that compete in approx. $20
billion portion of the $200 billion total semiconductor opportunity. We continue to see attractive
growth opportunities in our core cellular business and we are confident in our ability to benefit
from future growth opportunities as connectivity technologies converge.
Q7: Will Qualcomm make other large acquisitions in the future?
A: We do not speculate on such matters. We will continue to balance the capital needs of our
organic strategy, returns to stockholders and potential acquisitions. We continue to see attractive
growth opportunities in our core cellular business and we are confident in our ability to benefit
from future growth opportunities as connectivity technologies converge.
Q8: Why are acquisitions the best way to spend your cash surplus versus raising dividends
or buying back shares?
A: Since 2003, we’ve been focused on returning capital to our stockholders through our dividend
program and share repurchases. In addition, we expect this acquisition will produce a strong
potential return for our stockholders due to the growth opportunities open to the new combined
company. We will continue to balance the capital needs of our organic strategy, returns to
stockholders and potential acquisitions. Of note, we just increased our dividend by 13% on an
annualized basis.
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Q9: What is the value of this transaction to customers and how does it impact Qualcomm’s
ability to serve customer demand?
A: Atheros is a leader in WLAN and well positioned in providing a broad portfolio of
connectivity solutions. The combination of our technologies will provide rich and complete
platforms that enable Qualcomm’s customers to deliver more compelling user experiences,
accelerate time-to-market and expand their footprint.
Q10: Why buy versus build?
A: Atheros’ complementary product portfolio and leadership in providing connectivity solutions
for networking, PC and CE businesses represent an opportunity for Qualcomm to enter important
adjacent businesses and channels as a leader. Further, given our belief that the pace of
convergence is increasing there is significant value to accelerating our entry into these
businesses. Together, we will be able to utilize our leadership positions, relationships, and
technology assets to better and more quickly address these new and exciting connectivity
opportunities.
Q11: Isn’t this just Qualcomm following Intel and others in acquiring more networking
assets?
A: We do not comment on other companies’ strategies. We believe this an important strategic
transaction for Qualcomm and we are excited by the future growth opportunities we can address.
Q12: What has customer feedback been since you announced the acquisition?
A: Customer feedback has been extremely positive since the announcement. We believe that
customers are excited to see the benefits that our combined technology and product capabilities
can bring to their businesses.
Financial Impact
Q13: Will this transaction dilute Qualcomm’s earnings? How would this transaction
change Qualcomm’s revenue forecast?
A: While the accounting for the transaction is not yet finalized, Qualcomm estimates that on a
Non-GAAP basis the acquisition will be modestly dilutive to earnings per share in fiscal 2011
and modestly accretive in fiscal 2012, consistent with our previous forecasts. In addition, based
on preliminary estimates, we expect the transaction to be further dilutive to GAAP earnings by
approximately $0.09 to $0.13 per share for the remainder of fiscal 2011 driven primarily by
certain near-term purchase accounting charges and secondarily by ongoing share-based
compensation expense. These near-term purchase accounting charges result from the
requirement in ASC 805 to record acquired inventory and backlog at fair value at the time of
acquisition, which will result in reduced margin contribution as inventory and backlog as of the
acquisition date are converted to revenues over the remainder of fiscal 2011.
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Q14: What are the different components of the accounting treatment for non-GAAP and
GAAP EPS impact of the acquisition?
A: Non-GAAP estimates include amortization of all acquired intangible assets (i.e. completed
technology, IP R&D, patent value, customer contracts) except backlog. GAAP estimates also
include certain near term purchase accounting charges (majority expected to impact Q3 and Q4
FY11) and secondarily ongoing share-based compensation expense. These near-term purchase
accounting charges result from the requirement in ASC 805 to record acquired inventory and
backlog at fair value at the time of acquisition, which will result in reduced margin contribution
as inventory and backlog as of the acquisition date are converted to revenues over the remainder
of fiscal 2011.
Q15: Will Qualcomm Atheros, Inc. be part of the QCT segment?
A: Atheros is now a wholly owned subsidiary of Qualcomm Incorporated, called Qualcomm
Atheros, Inc. Craig Barratt is President, reporting to Steve Mollenkopf, EVP and Group
President of Qualcomm. The subsidiary’s results will be reported in the QCT segment.
Q16: Will there be integration costs as a result of this transaction? How much, and over
what periods?
A: We expect there to be limited integration costs as we expect to build upon Atheros’ success to
date and to integrate the Atheros team to accelerate Qualcomm Atheros, Inc.’s connectivity
roadmap.
Q17: How does Atheros’ cost structure compare to Qualcomm’s?
A: Both companies have competitive cost structures. This acquisition is focused on enabling
expansion for Qualcomm beyond cellular (i.e. computing, consumer electronics, and networking)
by adding to its suite of best-in-class technologies.
Q18: How will this impact your capital allocation strategies?
A: We do not expect this transaction to impact our capital allocation strategy. Since 2003, we’ve
been focused on returning capital to our stockholders through our dividend program and share
repurchases. In addition, we expect this acquisition will produce a strong potential return for our
stockholders due to the growth opportunities open to the new combined company. We will
continue to balance the capital needs of our organic strategy, returns to stockholders and
potential acquisitions.
Q19: Does this imply less confidence in Qualcomm’s core business?
A: Absolutely not. We view this acquisition as an opportunity to accelerate our expansion
beyond the traditional mobile cellular components and solutions. 3G, and thus Qualcomm’s core
businesses, continue to demonstrate strong execution and growth. We continue to be a leader
and pioneer of wireless communications technologies and are extremely well positioned for the
trends in our core businesses. Of note, we are incorporating our existing WLAN technology in
our integrated Snapdragon solutions, with our first such product, the MSM8960, sampling in the
June quarter. The acquisition of Atheros expands our product portfolio in our core markets and
provides exciting, incremental sales channels for Qualcomm products.
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Q20: Did Qualcomm use offshore cash to fund the transaction?
A: The acquisition was funded with onshore cash.
Q21: Why did Qualcomm decide to use onshore cash for this acquisition?
A: As we had previously mentioned, we have been evaluating the use of offshore and onshore
cash for the transaction. Based on further analysis and an evaluation of the complexity and
potential costs of using offshore cash, we decided that it is optimal for QC to use onshore cash
for the transaction. In addition, we are encouraged by the improved prospects of legislation that
will reform the corporate tax code and eliminate the large tax cost for companies to repatriate
foreign earnings. Finally, given our strong US cash position, using US cash will not impact our
ability to fund our normal US operations and dividend and stock repurchase programs.
Product Strategy
Q22: Is this a play for Qualcomm to expand into new devices?
A: Atheros is a leader in its space and well positioned in providing connectivity solutions.
Atheros’ complementary product portfolio, sales channels, and leadership in the networking,
computing and CE segments provides an opportunity for Qualcomm to expand beyond its core
mobile business into new business opportunities with additional products and channels,
representing an incremental and growing global TAM.
Q23: What specific new, incremental opportunities will be available to Qualcomm via this
acquisition?
A: This acquisition combines the technology strength and leadership of Qualcomm in mobile
platforms and WAN technology, with the technology strength and leadership of Atheros in LAN
connectivity. Our comprehensive industry-leading connectivity and networking portfolio will
help accelerate the expansion of Qualcomm’s presence in existing businesses and provide access
to significant new business opportunities with additional products and channels. With this
incremental set of products, channels and customers we can accelerate the extension of our
technologies and platforms beyond cellular to computing, consumer electronics and networking,
both home and enterprise.
Q24: Doesn’t Atheros sell discrete, non-integrated solutions? How does/will this strategy fit
into Qualcomm’s integration strategy? Will Atheros’ strategy be impacted going forward?
A: Atheros’ technology enables Qualcomm to broaden its product offering and complements
Qualcomm’s integration strategy. Atheros has been very successful with both standalone and
combination products, and will continue to serve multiple markets by offering the solutions that
customers want. We intend to utilize the strengths of Qualcomm and Atheros’ existing strategies
to provide a broad portfolio of products to our customers.
Q25: How are Atheros’ products used? How do they fit or complement Qualcomm’s
product portfolio and solutions?
A: Atheros products are used by many of the world’s top OEMs who manufacture personal
computers, consumer electronics and networking equipment for the digital home, enterprise and
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carrier networks . An increasing number of devices, both fixed and mobile, require multiple
communications technologies to support today’s connected applications. Qualcomm and
Atheros products are often installed in the same devices to enable them to connect to the Internet
and other networks through a variety of methods.
The combination of the two companies’ products is consistent with our longstanding focus on
integration. The integration of multiple communications technologies into a single
semiconductor chip allows for smaller form factors, reduced power consumption, more efficient
designs and allows faster time to market for our industry partners.
Q26: Will Atheros give Qualcomm all it needs to pursue the connectivity opportunity or do
you need to make further acquisitions?
A: The combination of these two companies provides a broad portfolio of products and
technologies. We are focused on the benefits of adding Atheros’ complementary technology to
our product portfolio and integrating it with our solutions.
As always, we look to pursue growth opportunities through organic innovation, and we’ll
continue to evaluate strategic M&A where it accelerates or enhances our organic strategy.
Q27: How will future roadmap decisions be made?
A: The two product management and engineering teams are being fully integrated. Together, the
Qualcomm Atheros, Inc. management team will determine a unified roadmap.
Q28: Will Qualcomm discontinue any of Atheros’ products or raise prices?
A: Qualcomm Atheros, Inc. will continue to offer our customers superior technology solutions at
competitive prices.
Q29: Who are Atheros’ biggest customers and most popular offerings?
A: Atheros products are used by many of the world’s top OEMs who manufacture personal
computers, consumer electronics and networking equipment for the digital home, enterprise and
carrier networks. Its product portfolio includes industry-leading solutions for WLAN, Ethernet,
Bluetooth, GPS, PLC and PON.
Q30: How will this impact Qualcomm’s WLAN connectivity and integration plans?
A: We are seeing positive market adoption of our mobile WLAN solution on Qualcomm
platforms. Of note, we are incorporating our existing WLAN technology in our integrated
Snapdragon solutions, with our first such product, the MSM8960, sampling in the June quarter.
Qualcomm will continue to support our mobile WLAN product roadmap and integration strategy
in order to deliver optimized solutions on our platform. Atheros brings an opportunity to expand
our offerings and provide a comprehensive connectivity portfolio.
Q31: Do you expect to gain sales in PC/Consumer/Networking behind Broadcom?
A: Atheros has been very successful as an independent company and after close we intend to
maintain and build upon the success they have achieved to date competing against many large
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competitors. Growing sales is certainly an objective. By combining Qualcomm’s portfolio of
technologies with that of Atheros, we believe we can add to the success they have experienced.
Additionally, this transaction expands Qualcomm’s business opportunities and creates platform
opportunities for existing and potential Qualcomm cellular and processor products.
Q32: Will Qualcomm Atheros, Inc. continue to sell into all their current product
categories?
A: Qualcomm has no plans to move away from the product strategies on which Atheros has
focused.
Q33: Will you be launching WiFi/BT/FM, etc. combo chips now that you have these
additional technologies?
A: Qualcomm has previously developed and announced multiple products which combine
wireless connectivity technologies. Future products will continue to leverage Qualcomm’s
strong integration capability and will be announced at the appropriate time.
Manufacturing
Q34: Is Atheros a fabless semiconductor company?
A: Yes, both Atheros and Qualcomm operate in a very similar and traditional fabless
manufacturing model.
Q35: Do they use the same fab partners as Qualcomm?
A: Yes, there are several overlapping manufacturing partners in both the front end fab and back
end assembly/test area.
Q36: Any overlap on wafer sizes? Any overlap in process nodes?
A: Yes, both in wafer sizes and technology nodes. Both Qualcomm and Atheros are shipping
product in the 65nm node.
Integration
Q37: How will Atheros be integrated and run within Qualcomm? How will results be
reported (i.e. segmentation, same level of disclosure/metrics)?
A: Atheros is now a wholly owned subsidiary of Qualcomm Incorporated called Qualcomm
Atheros, Inc. Craig Barratt will continue as President, reporting to Steve Mollenkopf, EVP and
Group President of Qualcomm. The subsidiary’s results will be reported in the QCT segment.
We have a history of providing useful information to investors and will continue to follow this
philosophy. We aren’t making specific disclosures in this regard at this time.
Q38: How will employees be affected by this transaction? Will Atheros employees now
become Qualcomm employees or vice versa?
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A: The vast majority of employees will be employed by a Qualcomm company at the close of the
acquisition. A number of Qualcomm employees currently working on wireless connectivity
products and GPS also will become part of Qualcomm Atheros, Inc., reporting to Craig Barratt.
Q39: Will employees have to move?
A: All Atheros employees will remain in their existing offices upon the closing. Qualcomm may
explore the possibility of co-locating Qualcomm and Atheros teams in a couple of locations in
the future.
Q40: Will this transaction result in any workforce reductions?
A: There were a very small number of Atheros employees for whom an on-going role was not
identified. These employees have been given opportunity to explore other opportunities within
Qualcomm. Since we are focused on growing the business, we anticipate an expansion of the
workforce in many of the technical areas.
Intellectual Property
Q41: Does this acquisition mean that Qualcomm will own all of Atheros’ patents and IP?
A: Atheros is now a wholly owned subsidiary of Qualcomm. At the current time, Qualcomm
does not plan to have Qualcomm Atheros assign to Qualcomm ownership rights in the patents
and IP owned by Qualcomm Atheros on the date of completion of Qualcomm’s acquisition of
Qualcomm Atheros.
Q42: What are the IP/licensing implications?
A: Whether any or all of Atheros’ patents are subject to any of Qualcomm’s existing licenses
will vary from agreement-to-agreement, and therefore depends on the confidential details of each
individual agreement. Whether the addition of Atheros’ patents to Qualcomm’s existing portfolio
creates any new licensing opportunities will be evaluated as we move forward.
Q43: What kind of IP position does Atheros have?
A: Leveraging 12 years of internal research and targeted acquisitions, Atheros has actively
developed an IP portfolio covering, among other things, wireless LAN, powerline
communication, and location technologies.
Q44: Does Atheros have any IP agreements in place? (with Broadcom)?
A: As would be expected with any technology company, Atheros has existing IP agreements, the
details of which (including the identity of the parties) are confidential to Atheros. However,
Atheros will not be authorized to grant any licenses or other rights under any Qualcomm patents.
###
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Overview of Atheros Products
WLAN:
Atheros provides a comprehensive portfolio of single and multi-chip WLAN products ranging
from entry-level wireless networking products for the PC and SOHO segments to sophisticated
wireless infrastructure with advanced network management capabilities for enterprise
networking. Its wireless systems solutions target applications in the PCs, enterprise access,
broadband gateway, SOHO networking, consumer electronics and mobile communications
segments. Its WLAN products support the IEEE family of WLAN standards, including 802.11a,
802.11b, 802.11g and 802.11n.
Competitors include Broadcom, Intel, Ralink
Key Customers: Top 10 PC OEMs, Nintendo, Sony, Samsung, Vizio
Mobile WLAN:
Atheros’ single-chip, CMOS-based ROCm family of WLAN solutions are developed to meet the
growing demand for WLAN in mobile devices such as smartphones and mobile consumer
products including mobile video game devices, digital cameras and PMPs
Competitors include Broadcom, Marvell, Texas Instruments
Key Customers: Nintendo, Sony, Samsung
Ethernet:
Atheros’ Ethernet portfolio features single-chip CMOS Fast and Gigabit Ethernet switch, local
area network-on-motherboard, or LOM, controller and transceiver solutions. These technologies
enable Atheros to offer end-to-end, silicon platforms to its networking and computing customers
for both wireless and wired products. Atheros’ Ethernet products complement its portfolio of
wireless and powerline connectivity solutions for access points, routers and gateways, which
typically include Ethernet physical layer, transceivers and switches, our computing portfolio for
PC customers’ LOM applications and powerline adapters which incorporate an Ethernet
transceiver.
Competition includes Broadcom, Marvell, Realtek, and Micrel
Key Customers: Netgear, TP Link, Buffalo, D-Link
Bluetooth:
Atheros delivers Bluetooth solutions for PCs and also offers combination solutions that integrate
its Bluetooth and Align single stream WLAN products for PCs and mobile devices. Its latest
product is based on the recent Bluetooth 4.0 standard, which adds low-energy features to the
specification. Atheros’ Bluetooth solutions provide optimized coexistence and performance with
WLAN and 3G technologies.
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Competition includes Broadcom and CSR
Key Customers: 8 of the top 10 PC OEMs
GPS:
Atheros’ GPS portfolio features single-chip receivers and a software suite enables it to offer GPS
system solutions for signal acquisition, tracking, data extraction and GPS navigation. Its GPS
product portfolio, which targets high-volume, embedded GPS applications including PNDs, PCs,
PMPs, portable gaming devices and smartphones, complements its WLAN, Bluetooth and
Ethernet offerings
Competition includes CSR, Broadcom, Texas Instruments, and Mediatek
PLC:
Atheros’ Powerline technology solutions are used by customers to enable high-speed video and
data networking over the home’s existing electrical wiring and accessed through the common
electrical wall outlets located throughout the home. In the digital home, its ICs are used both in
powerline-to-Ethernet adapters, which can be used to connect products with Ethernet ports, and
in embedded products, where ICs are incorporated directly into the product. Most of its
powerline IC products are used in powerline-to-Ethernet wall adapters and networking devices to
provide connectivity between broadband modems or routers and PCs, set-top boxes, gaming
consoles and other electronic products.
Competition includes Broadcom (Gigle), Marvell, and Sigma Designs
Key Customers: NETGEAR, devolo, Echostar, Free, Deutsche Telekom, France Telecom,
Swisscom
PON:
With the Opulan acquisition, Atheros gained entry into the passive optical networking (PON)
segment. Atheros’ PON products include 1 and 10 Gbps EPON (Ethernet PON) ICs, more
specifically OLT (optical line terminal) ICs for networking from the central office, and ONU
(optical network unit) ICs for implementation in residential gateways for homes and multi-
dwelling units.
Competition includes PMC-Sierra, Broadcom (Teknovus), Cortina and Broadlight
Key Customers: Huawei, ZTE and Mitsubishi
Atheros Revenue Mix by Channel: Total Q4 2010 Revenue: $226.8M
Q4 2010 Networking Revenue: $110.5M (49% of Total Revenue)
Q4 2010 Consumer Revenue: $78.3M (34% of Total Revenue)
Q4 2010 Computers/PC Revenue: $38.1M (17% of Total Revenue)
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