Avago files for $400 million IPO

28 Aug 2008

Chip maker Avago Technologies is hoping to raise $400 million in an initial public offering (IPO) in spite of a turbulent stock market and a slumping semiconductor industry.

Avago filed its S-1 papers wth the US Securities and Exchange Commission (SEC) on 21 August. The proposed ticker is AVGO. No share price or date for the offering is listed.

The move would take Avago public again, nearly three years after it was carved out of Agilent Technologies, which itself is a spin-off from Hewlett-Packard.

While Agilent now concentrates on test and measurement, Avago's focus is on analogue semiconductors across several markets including industrial and automotive, datacoms, wireless communications and consumer applications.

Private equity firms Kohlberg Kravis Roberts (KKR) and Silver Lake Partners bought the former Agilent semiconductor and optical transceiver business for a massive total of $2.66 billion in 2005.

At first Avago struggled, recording a loss of $227 million in fiscal 2007 and $159 million in fiscal 2007, but the company has since recovered, posting a $21 million profit for the first half of fiscal 2008.

The chip maker has also slimmed down by disposing of five businesses. That includes the sale of its storage business to PMC-Sierra for $420 million in 2007.

Avago also made four small acquisitions, according to the S-1. The first was the polymer optical fibre (POF) business of Infineon Technologies for $27 million. More recently, it acquired Infineon's bulk acoustic wave filter business for approximately $32 million.

Number of global IPOs

The big question, of course, is whether this is the right time to test the public markets. Other companies don't seem to think so, judging by the reduced number of IPOs this year.

Some industry observers suggest that Avago's investors want to cash in right now because they don't see the stock market performing any better in future. Others seem to think that a blockbuster IPO could be just what the market needs. We'll have to wait and see what happens.

This article was originally posted on fibresystems.org