Velio Dealio Realio?
Velio has been presumed to be on the block since the departure of CEO Raju Chekuri (see Chekuri Checks Out at Velio). The company was in negotiations for a sale late last week, sources say.
Sources couldn't pinpoint the potential buyer, but the popular favorite is Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC), a company that's been on a buying streak lately (see AMCC Snacks on Cicada Scraps, AMCC to Buy JNI for $190M, and AMCC Switches On IBM's Fabric).
Some sources believe the acquisition is already completed, but if that's the case, it rules out AMCC. "We've looked at many companies over the past year, and the notion that we've closed a deal with Velio is not true," writes Joseph Vithayathil, AMCC senior vice president of business development, in an email.
That leaves open the possibility that AMCC is still negotiating with Velio, or that negotiations did happen but were called off. Vithayathil wouldn't comment on those possibilities. Velio, meanwhile, maintains a policy of not commenting on acquisition rumors.
It's not hard to see why Velio might want to be acquired, as OEMs continue to favor larger suppliers that are less likely to vanish from the scene. "In the universe you're talking about -- TDM switches and things like that for the telecom market -- there's so little business. No one's going to buy from a startup," says Arnab Chanda, analyst with Lehman Brothers.
Velio got off to a promising start, producing a grooming switch that packed 144 serializer-deserializers (SerDes) onto one chip. But the company's development may have gotten sidetracked when Cisco Systems Inc. (Nasdaq: CSCO) came around with a request for a customized chip. "Because they focused on the Cisco thing, they were dead in the water on the grooming switch," one source says. (See Velio Claims Switch Silicon Breakthrough and Velio Breaks Grooming Barrier.)
— Craig Matsumoto, Senior Editor, Light Reading