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Petaluma telecom startup sold for $123 million
Published: Wednesday, February 3, 2010 at 3:18 p.m.
Last Modified: Wednesday, February 3, 2010 at 3:24 p.m.
Teknovus, a Petaluma startup that makes computer chips and software for fiber optic communications, has accepted a $123 million takeover offer from Broadcom Corp., the two companies said Wednesday.
Teknovus, part of a second wave of startups that sprouted in Sonoma County’s Telecom Valley in the early 2000s, will stay in Petaluma, Broadcom spokeswoman Gennis Lafayette said.
The deal will help Teknovus grow, said Greg Caltabiano, CEO of the Petaluma company. Founded in 2002, it has carved out a niche developing Ethernet Passive Optical Network (EPON) technology, which delivers broadband service over fiber optic cables used in telephone, wireless and cable networks.
“As the EPON market segment evolves and expands, technologies from both companies can be combined to enable a higher performance, lower cost EPON-based access infrastructure,” he said.
Teknovus has a large customer base in Asia, where 94 percent of fiber communications networks use EPON technology.
“Teknovus has a strong product and has established a solid reputation with our existing customers,” said Martin Lund, who heads Broadcom’s network switching unit.
The Irvine company, which had $4.5 billion in sales in 2009, will pay $123 million cash for Teknovus.
It was the third acquisition of a Sonoma County telecom startup in the past year. Petaluma’s Turin Networks merged with San Jose-based Force10 Networks last April. TriAccess Technologies in Santa Rosa was bought in September by TriQuint Semiconductor, which is based in Hillsboro, Ore.
The terms of those deals were not disclosed.
“Teknovus products will add a key element to our existing service provider offering that will enable us to better serve our customers in this segment,” Lund said.
The Asia market for EPON is expected to grow three-fold by 2014, the companies said Wednesday.
Publicly-held Broadcom makes computer chips for switching, Internet, cable and other network applications, but until the Teknovus acquisition didn’t offer EPON chips or software.
Carriers are switching to EPON and related technology as they struggle to handle a growing flood of voice, video and data.
In addition to its Petaluma headquarters, Teknovus has offices in San Jose, Boston, Tokyo, Seoul, Beijing, Hong Kong and Shanghai. It has about 140 employees worldwide, including 70 in Petaluma.
Teknovus customers include large Asian carriers China Telecom, China Mobile, Japan’s KDDI and Korea Telecom. They use its EPON technology to deliver broadband over their fiber networks to residential customers.
The Asia Pacific market has about 22.4 million subscribers now but will grow to 94.5 million by 2014, according to an industry report.
Teknovus has raised more than $60 million in venture funding over the past eight years, with backers including NEC Electronics, Lightspeed Venture Partners, Mitsubishi Corp., Itochu Technology Ventures and Samsung Ventures America.
The sale is expected to close in the first or second quarter this year, Broadcom said.
The announcement came on the same day Broadcom announced a $59.2 million net profit in the fourth quarter, reversing a loss, despite a large charge to settle a stock-option backdating case against the company.
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