In mixed good and bad news for Broadcom Corp and Advanced Micro Devices Inc, the two companies today announced the completion of an agreement that saw Broadcom buy AMD's digital TV (DTV) business for $50 million less than originally expected.

When first announced in late August, Broadcom said it would pay $192.8 million to acquire the business, stating plans to make the unit the center of its existing DTV line. But because of anticipated Q4 revenue from the AMD business that is expected to fall below original outlooks, the companies agreed to reduce the cash purchase price to $141.5 million.

The deal was touted by AMD and Broadcom in their recent Q3 earnings reports. For Broadcom, which is looking to control costs, the lower price means more cash on hand, but the DTV business buy now offers the company less of an instant revenue growth spurt when fully incorporated than first projected. Meanwhile, financial analysts have stated that AMD, which is still drowning in losses, should welcome cash infusions -- and the larger the better -- as it wades through the currently constricting economic situation.
 
Broadcom said it anticipates AMD’s DTV business will have Q4 revenue between $15 and $20 million. The anticipated dilutive impact to EPS (earnings per share) of $0.04 to $0.05 per share in 2009, with the combined DTV business approaching EPS neutrality in Q4 2009, has not changed, Broadcom said. 

A portion of the consideration payable to AMD was placed into escrow pursuant to the terms of the definitive asset purchase agreement. Broadcom noted that it may record a one-time charge for purchased in-process research and development expenses related to the acquisition in the current quarter. The amount of that charge, if any, has not yet been determined.

By: DocMemory
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