Emulex to Buy Storage Switch Maker Vixel - EnterpriseStorageForum.com

Emulex to Buy Storage Switch Maker Vixel

Emulex , a provider of host bus adapters (HBAs) for storage networks, has moved to acquire storage switch maker Vixel for $310 million in cash, at $10 per share.

Costa Mesa, Calif.-based Emulex competes with QLogic, HP, and JNI (which itself was recently acquired by Applied Micro Circuits) in the market for HBAs, which provide input/output (I/O) processing and physically connect servers and storage devices with little or no help from the server CPU. HBAs are designed to provide storage management capabilities such as load balancing, fail-over, and SAN administration.

By acquiring Bothell, Wash.-based Vixel, which makes embedded switch ASICs and subsystems that help storage networking original equipment manufacturers (OEMs) improve the functionality of their products, Emulex becomes more attractive to OEMs due to its increased breadth of storage networking infrastructure components.

OEMs use HBAs in conjunction with their storage arrays, tape libraries, and appliances to free up the CPU to perform other database and application tasks. Now Emulex can offer Vixel's line of InSpeed storage switches with its HBAs for a more rounded suite. The InSpeed storage switches channel data from multiple input ports to the specific output port that will take the data toward its intended destination.

FC SAN components hardware revenue totaled $1.47 billion in 2002, up 3 percent from 2001 hardware revenue of $1.43 billion, according to research concern Gartner. Brocade, Emulex, McDATA, and QLogic increased their revenue share from 78 percent to 85 percent of the market total.

Paul F. Folino, Chairman and CEO of Emulex, said in a conference call that the InSpeed line will help his company boost its revenue growth as well.

"Our key goal is to accelerate Emulex's revenue growth potential," Folino said. "This acquisition enables us to tap into the incremental emerging market for embedded storage switch solutions, a market that could yield a total available market opportunity of $450 million by 2007. Vixel's embedded switch TAM adds an incremental 30 percent or more on top of Gartner's estimate of $1.3 billion for the Fibre Channel HBA market in 2007."

Emulex already sells HBAs to IBM, EMC, Dell, Fujitsu Siemens, and Hitachi Data Systems, among others. Vixel's InSpeed storage switching business has delivered double digit sequential revenue growth in each of the past four quarters, driven by design wins with HP, Network Appliance, Fujitsu, NEC, Apple, and BlueArc.

Any Vixel shares not acquired by Emulex in the tender offer will be acquired in a second step merger in which remaining Vixel shareholders will receive the same cash price paid in the tender offer. Emulex will also assume all existing vested and unvested Vixel stock options. The tender offer is expected to be completed in November.

Story courtesy of internetnews.com.

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