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Vitesse snaps up Cicada for $66 million

The maker of communications chips announces its proposed acquisition of Cicada following more than a year of collaboration between the two companies on network switches.

Communications-chip maker Vitesse Semiconductor said it would acquire privately held Cicada Semiconductor in a $66 million deal Vitesse expects to result in $10 million of new revenue next year.

Camarillo, Calif.-based Vitesse has collaborated with Austin, Texas-based Cicada for more than a year on gigabit-speed network switch products that combine Vitesse's LAN (local area network) switches with Cicada's copper transceivers.

Most of the $10 million return Vitesse anticipates from the transaction next year will come in the second half, when customers are expected to upgrade their 10/100mbps networks to gigabit Ethernet speeds.

"We expect this acquisition to double our revenues in the LAN switch market and to position us to gain share as the market embraces gigabit switch products," Lou Tomasetta, chief executive officer of Vitesse, said in a statement.

For its fiscal year ended Sept. 30, Vitesse reported $156.4 million in revenue.

Vitesse said it expects Cicada shareholders to approve the cash deal in the first quarter of the coming year. By closing, Cicada will have reduced its work force to about 40 employees from about 55 now. Most of the remaining staffers will work on product development.