Glass Lewis Recommends Emulex to Reject Broadcom Offering

Emulex Corporation announced that Glass Lewis & Co., a proxy advisory firm, recommends against the consent solicitation initiated by Broadcom Corporation in relation to Broadcom’s $9.25 per share tender offer.

Glass Lewis recommends against all five of Broadcom’s consent solicitation proposals. Glass Lewis recommends stockholders use the WHITE proxy card mailed to them by Emulex to place their votes and that stockholders should not sign the gold proxy card provided by Broadcom.  Emulex also announced that it has updated its related website with additional materials for stockholders including a new presentation regarding the Broadcom offer and solicitation, as well as detailed instructions on how to reject Broadcom’s solicitation. Emulex urges its stockholders to review these important materials that highlight why Broadcom’s offer significantly undervalues Emulex, respond to certain misleading statements by Broadcom and underscore why revoking consent to Broadcom’s proposal is in the best interests of Emulex stockholders.

In their report, Glass Lewis stated: "We note that the governance reforms have been submitted by Broadcom merely in an effort to force an acquisition of the Company…In our opinion, Broadcom has little interest in the long-term corporate governance of the Company unless such changes support the Dissident’s hostile takeover of the Company."

The Glass Lewis report also commented: "We find no reason to believe that Emulex’s board has not acted in the best interests of shareholders… Furthermore, support of the proposals could potentially enable Broadcom to acquire Emulex for $9.25 per share, which is below the current trading value of the Company’s shares."

Commenting on the report, Emulex President and Chief Executive Officer, Jim McCluney said: "We are pleased Glass Lewis recognizes that Broadcom’s consent solicitation is not in Emulex stockholders’ best interests and that Broadcom’s proposals are solely aimed at furthering their inadequate offer. We appreciate the broad support we have received from stockholders on the Board’s recommendation against Broadcom’s offer, and we continue to urge stockholders to reject Broadcom’s consent solicitation."

In its presentation filed with the Securities and Exchange Commission on June 17, Emulex highlights key issues for stockholders to consider regarding Broadcom’s tender offer and related consent solicitation including:

Emulex believes that Broadcom’s bid is an opportunistic attempt to acquire Emulex on the cheap.

• Emulex has a strong core business with attractive scale and margins and Emulex’s recent design wins in converged networking highlight the opportunities for additional value creation at Emulex.
• Emulex believes their stockholders agree – less than 3% of shares were tendered into Broadcom’s offer as of June 17.

Emulex’s peers and the broader market have posted significant gains since Broadcom made its bid, further underscoring the gross inadequacy of the offer.

• Since Broadcom announced its offer, Emulex’s peer group has traded up approximately 38% and 16%. If Emulex had traded in line with its peers, it would be trading at approximately $9.09 per share even in the absence of Broadcom’s offer and without reflecting the impact of recent design wins.
• This implies that Broadcom’s offer is actually a 1.8% premium to where Emulex would be trading, or a potential discount if the recent design wins were reflected in Emulex’s stock price.

Emulex believes that Broadcom’s misleading statements are intended to create uncertainty and doubt about Emulex’s value in an attempt to justify their grossly inadequate offer.

• Despite Broadcom’s assertions, Emulex has a long-history of revenue growth, a track record of capitalizing on new opportunities and a history of meeting or exceeding guidance.
• In addition, Broadcom is attempting to mislead Emulex stockholders by suggesting that the Company has not been able to convert design wins into revenues – this both ignores the facts with respect to historical design wins, as well as confuses the timing of the impact from Emulex’s recent design wins.

Broadcom’s consent solicitation process, if successful, will embolden Broadcom and transfer leverage to Broadcom with no benefit to Emulex’s stockholders.

• All stockholders should ask a simple question – Why consent to an inedaquate offer? The effective result of delivering Broadcom’s consent today is to allow Broadcom to call a special meeting, just a few weeks prior to the November 19, 2009 annual meeting, for the purpose of installing a full slate of new directors handpicked by Broadcom to further its inadequate offer.

To reject Broadcom’s tender offer and related consent solicitation, stockholders do not need to take any action on the GOLD colored card that they may have received from Broadcom. Instead, Emulex stockholders should sign and return the WHITE consent revocation card provided by Emulex. Filling out and mailing this card will enable Emulex to keep informed of the process. Also, any stockholder who filled out and mailed a GOLD card but wishes to revoke it can simply complete and mail a WHITE card.