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Broadcom to acquire Bluetooth company

Chipmaker Broadcom is scooping up Bluetooth software company Widcomm for $49 million as it looks to find more customers of the short-range wireless networking technology.

Broadcom announced Monday the acquisition of software company Widcomm, a move that reflects the chipmaker's intention to expand its presence in the Bluetooth market.

Irvine, Calif.-based Broadcom has signed an agreement to buy privately held Widcomm for $49 million in stock. The deal is expected to close by June 30. Broadcom is reserving about 1.23 million shares for the acquisition, and up to $3 million of the acquisition price may be paid in cash, according to the company. Both boards have approved the deal.

The move is meant to increase Broadcom's influence in the Bluetooth market. The company will essentially be adding Widcomm's Bluetooth software to its portfolio of chips, while also giving Broadcom a longer list of customers to sell to. Widcomm's software ships as part of nearly 100 products from more than 80 customers, including Dell, Hewlett-Packard, IBM, Samsung and Sony Electronics.

Bluetooth is a short-range wireless networking technology that allows portable devices such as cell phones and handhelds to connect to one another and share data at transfer rates up to 720 kilobits per second. The emergence of other wireless technologies, such as Wi-Fi and ultrawideband, has narrowed market opportunities for Bluetooth, but analysts still expect shipments of Bluetooth products to grow significantly.

"Many of those other wireless technologies are complementary to Bluetooth," said Joyce Putscher, an analyst with research firm In-Stat/MDR. She added that the automotive industry will be one of the catalysts for continued growth of the technology.

Bluetooth chip shipments reached 69 million in 2003, up from 35.8 million in 2002, according to In-Stat/MDR. Shipments are expected to exceed 100 million in 2004.