Storage Consolidation Continues: Applied Micro Circuits Grabs JNI

Under the terms of the agreement, Applied plans to pay $7 per share in cash for each outstanding share of JNI common stock, or about $190 million, and will assume all outstanding JNI employee stock options. The acquisition is expected to close in the fourth quarter of 2003, subject to JNI stockholder approval and regulatory approval.

Applied designs, develops, and markets high-bandwidth ICs for WANs. The company in the past was involved in the storage market and had developed some Fibre Channel ICs, said Brent Little, vice president of marketing at the company. However, it decided to focus on the telecom boom just before it became a bust. "Unfortunately, we didn't see the telecom boom as just a blip," he said.

JNI gives Applied a chance to expand into a growing business while leveraging its telecom expertise, said Little. The storage host-bus adapter business is growing, and JNI has a lot of traction and momentum in the market, he said. "Also, we were looking for a company with the right cultural fit for us," he said. "JNI is the right size at the right place at the right time. Both of us being in San Diego is also helpful."

The two will be a powerful combination, especially as the Fibre Channel market migrates to 4-Gbps and 10-Gbps products, Little said. His company is already doing 40-Gbps products for the telecom space and is on its fourth generation of 10-Gbps products, he said.

Russell Stern, president and CEO of JNI, said his company has been through rough times and a management change that brought him into JNI about a year ago. However, in its most recent quarter JNI showed improvement, he said.

More than 90 percent of JNI's business comes from the Solaris environment, a fact that is changing as the company works with Network Appliance on InfiniBand and readies its second set of Windows-based host bus adaptors, said Stern.