Avago IPO's a Go

Having gotten back to profitability, the former Agilent division is filing to go public

Craig Matsumoto, Editor-in-Chief, Light Reading

August 22, 2008

3 Min Read
Avago IPO's a Go

Nearly three years after being carved out of Agilent Technologies Inc. (NYSE: A), optical specialist Avago Technologies Pte. is ready to go back public again.

Avago filed its form S-1 with the Securities and Exchange Commission (SEC) yesterday. It's got no share price listed and a maximum value of $400 million estimated for the IPO.

Formerly the semiconductor business of Agilent, Avago got taken private in 2005 by Kohlberg Kravis Roberts & Co. (KKR) and Silver Lake Partners . (See Avago Springs From Agilent.)

Since then, Avago has phased in and out of profitability. During fiscal 2007, which ended in October, it took a $158 million writedown of assets and incurred $51 million in restructuring charges, which led to on-paper losses in the July quarter. More recently, Avago clawed back to an 8 cents-per-share profit for the quarter that ended in May.

Table 1: Avago's Earnings

Quarter ended

July 31, 2006

Oct. 31, 2006

Jan. 31, 2007

April 30, 2007

July 31, 2007

Oct. 31, 2007

Feb. 3, 2008

May 4, 2008

Revenues ($M)

408

393

375

380

381

391

402

411

Earnings (Loss) Per Share

($0.11)

($0.36)

$0.03

$0.02

($0.78)

($0.01)

$0.02

$0.08



Avago has slimmed down as well, having sold off off four businesses. That includes the sale of the storage operation to PMC-Sierra Inc. (Nasdaq: PMCS), a deal that happened before the Avago spinoff became official. (See PMC Bites a Bit of Agilent and Is PMC Storage Shopping?)

Table 2: Pieces Avago's Sold

Business

Sold to:

Base Price

Oct. 2005

Storage

PMC-Sierra

$420M

Feb. 2006

Printer ASICs

Marvell

$245M

Nov. 2006

Image sensors

Micron

$53M

c.Nov. 2006

Image sensors,intellectual property

undisclosed

$12M

Oct. 2007

Infrared operations

Lite-On Technology

$19M



Avago's products cover quite a swath, encompassing color sensors, LED displays, and radio frequency (RF) devices. In telecom optical, it sells transmitter and receiver modules as well as transceivers.

One question is whether Avago wants to brave this market, which hasn't been particularly friendly. The Nasdaq Composite has been up lately, but it's down about 15 percent since early November.

How has all this worked out for Agilent? The Avago spinoff, combined with other divestitures, was supposed to kick-start the stock as the company focused on its test-and-measurement strengths.

Agilent stock traded at $33.90 on Dec. 1, 2005, when the Avago spinoff was announced. After some ups and downs, it's right back at that level, closing at $34.63 yesterday. But it's recovered after suffering a dip, along with most tech stocks, during the first part of this year.



— Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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