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Avago Springs From Agilent

Agilent completed the sale of its semiconductor business today, christening the privately held spinoff Avago Technologies.

Agilent sold the semiconductor division -- which includes optical transceivers, mostly for the enterprise market -- to private equity firms Kohlberg Kravis Roberts & Co. and Silver Lake Partners in a deal announced in August. (See Agilent Launches Extreme Makeover.

It's the second spinoff for some Agilent veterans, as Agilent itself went public out of Hewlett-Packard Co. (NYSE: HPQ) in 1999.

The new owners aren't making many immediate changes -- not a surprise given Avago's bulk: 6,500 employees across nine product divisions, making it the world's largest privately held chip company.

Nor does the sale alter the market landscape for optical components. Agilent remains the top transceiver supplier (when counting telecom and enterprise optics) with JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) second. JDSU still rules the roost on the telecom side.

Dick Chang, formerly senior vice president of new business development at Agilent, has been named Avago's president and CEO.

Avago's storage-chip business was sold to PMC-Sierra Inc. (Nasdaq: PMCS) after the spinoff was announced. (See PMC Bites a Bit of Agilent.) But Avago will still have a presence in storage, with Fibre Channel transceivers at 1, 2, and 4 Gbit/s.

Chang notes that the PMC sale was an opportunistic play, not a sign that other pieces of Avago are on the block. "We didn't go out and immediately look for an acquirer. They put an offer on the table," he says.

Such offers have been coming in for years and haven't stopped, he adds. "These conversations are ongoing, but we're not actively pursuing any opportunities to divest."

Rather, the goal is to take Avago public in pieces, spinning off the product areas that seem most appealing to the market, Chang explains. One IPO of the entire company would be impractical given the disparate products involved -- wireless components plus LEDs doesn't make a great IPO story.

Avago is incorporated in Singapore, where Agilent -- and before that, HP -- has a long history of operating. Three-quarters of Avago's employees are in Singapore and Malaysia, and some key customers such as contract manufacturer Flextronics Corp. (Nasdaq: FLEX) are incorporated there. Some tax advantages came with the decision, too, Chang says.

— Craig Matsumoto, Senior Editor, Light Reading

Pete Baldwin 12/5/2012 | 2:52:16 AM
re: Avago Springs From Agilent Is Wall Street ready for an optical IPO out of these guys? Or will a couple of other product groups have a better shot at going public first?
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