LSI Logic buys $878 m. worth C-Cube stock

Chipmaker LSI Logic announced that it has agreed to acquire the

Milpitas-based C-Cube Microsystems for about $878 million in stock. The move

will help LSI expand sales of its customized ICs in the area of equipment for

television set-top boxes.



The purchase means LSI is paying a large premium over C-Cube's stock value,
which has declined significantly in the recent high-tech stock slump. But

analysts said the move shows LSI really wants C-Cube's technology and envisages

significant business from the acquired technology.

C-Cube's chips send video and data from the Internet to set-top boxes that

connect TV sets to digital broadcasts. Digital cable and satellite services

provide hundreds of channels, better sound and picture quality and allows

Internet use on standard TVs.

Other applications include DVD and emerging CODEC-based applications, such as

personal video recording, home media servers, recorder DVD, residential gateway

and streaming video. C-Cube has 600 employees and had 2,000 sales worth $265

million. Its customers include Sony and Motorola.

"The acquisition of C-Cube will enhance LSI Logic's technology strengths

in designing and manufacturing complete solutions for customers in rapidly

growing communications and broadband entertainment markets,'' said LSI chairman

and CEO, Wilfred Corrigan.