History 2003: Wealthy Emulex Buys Strapped Vixel

Emulex’s purchase of Vixel hardly comes as a surprise.

The latter has been ailing financially, with revenues of $18 million and a net loss of $8 million for its 9-month period ending September. Never once profitable in its 12-year history, the Bothell, WA-based company had accumulated losses of nearly $141 million and was obliged to slash 166 jobs at the time of its IPO four years ago, for a current workforce of 115 people.

The company was also forced to sell of its SAN management software group to Fujitsu Softek last year.

Meanwhile, Emulex is up to its ears with available cash, $560 million.

Vixel started out in FC switches, but had difficulty facing the tough competition, and so oriented itself towards embedded switches for disk arrays known as InSpeed, landing 13 OEMs including Apple, BlueArc, Fujitsu, HP (for its EVA line), NEC, NetApp and Xyratex.

This activity is far more complementary with the business behind Emulex’s success, FC HBAs, in which the latter is far and away market leader.

Emulex acquired Vixel in an all-cash transaction for approximately $310 million, which strikes us as a little steep. The HBA company also disclosed that it has acquired the technology assets of start-up Trebia Networks, which recently closed shop in Acton, MA, for $2 million in cash, a real bargain this time, when you consider that $50 million had been invested in Trebia since its inception in July 2000. The acquired technology includes multi-protocol storage network processors and TCP offload engines.

This article is an abstract of news published on issue 190 on October 2003 from the former paper version of Computer Data Storage Newsletter.

Note: In February 2015, Avago Technologies announced it would acquire Emulex for $8 per share, in cash. Avago, a spinoff of Hewlett Packard, merged with Broadcom in May of that year.