Hot to enter the cable-modem-components market, major
electronics manufacturers have waged a lengthy tug of war over Libit Signal Processing
Herzlia, Israel-based Libit -- which, along with Broadcom
Corp., is a silicon provider for the only two cable modems certified under the
industry's Data Over Cable Service Interface Specification -- has fended off at least
one suitor, and it is talking with several others, including giant Lucent Technologies,
about possible deals.
Libit said that contrary to some news reports, it has no
buyout deal yet with anyone, although other sources familiar with its talks indicated that
Lucent was a clear front-runner, and that it could finish off a deal by the National Show
Would-be acquirers like Lucent and rejected suitor Intel
Corp. see an opportunity to bring their resources to bear quickly in a cable-modem-chip
market currently dominated by Broadcom.
They are betting that modem vendors do not want to be tied
to a single silicon supplier as their market grows and production demands increase.
Broadcom controls an estimated 95 percent of the cable-modem-chip market.
Toshiba America Consumer Products used Libit's
solution in its DOCSIS-certified modem. And Sharp Electronics Corp. and some other
manufacturers are expected to use Libit chips in modems that they put up for certification
later this year.
"I'd expect Libit, either with or without a
Lucent deal, to have other vendor relationships online, probably around the time of the
National Show," said Michael Harris, president of Kinetic Strategies Inc.
Other chip-makers, including Conexant Systems Inc., plan to
enter the DOCSIS-chip market, but they have not yet landed spots in any modems certified
by Cable Television Laboratories Inc. for DOCSIS.
The same goes for Lucent, Intel and other big
networking-hardware companies, which can try to develop their own DOCSIS solutions, but
which see a faster path to market with Libit.
"There are only a handful of players that have
legitimate solutions for DOCSIS," Harris said. "If you're a major player
like Lucent, and you see a market like cable, this is the quickest way."
For Libit, a buyout is only one option that the company has
been exploring in light of the interest in its proven DOCSIS technology.
Libit is also weighing an initial public offering of stock
-- a potentially lucrative avenue, given the continued market frenzy for virtually any
Internet-related issue and the performance of Broadcom since its IPO a year ago.
Broadcom's share price has risen by more than sixfold.
"A lot of people are interested in the company, so
they're just getting a feel for what the market is like," Libit spokesman Earl
Libit rejected a buyout proposal from Intel, reportedly in
the $250 million-plus range, earlier this year. The interest from the world's largest
chip-maker followed its work with Libit on a draft specification for CableLabs covering
cost-efficient, "host-based" cable modems.
Intel declined to comment on the buyout reports or on
indications from sources that the corporate maneuvering might slow progress in development
of the host-based modem specification for CableLabs.
Intel indicated as late as March that it expected the draft
spec for host-based modems to be ready for submission to CableLabs by the end of that
month, although spokeswoman Tammy Casey said last week that it could be several more
Harris noted that even without acquiring Libit, it was
likely that Intel would make a cable-modem play with silicon from Level One
Communications, a maker of high-speed telecommunications and networking integrated
circuits that Intel is acquiring in a $2.2 billion stock swap.
A Libit spokesman said the company is still working on its
part of the host-based-modem draft specification, with the intention of having it ready
for submission around the time of the National Show.
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