Mergers and acquisitions (M&As) have always been an integral part of Broadcom Corporation's growth plans. Acquiring two companies in the last one year and 40 buyouts over the 12 years of its trading history stands testimony to this.
With revenues worth $4.49 billion for 2009 and over $2 billion in cash and short-term assets, the California-based player in semiconductors for wired and wireless communications is looking for more acquisitions - both small- and mid-size. Broadcom India Managing Director Rajiv Kapur said some Indian companies are also on its radar.
In an interview with K Rajani Kanth, he talks about the company's present and future plans and the growing importance of their India facilities. Edited excerpts:
Broadcom has always been very aggressive in acquisitions. Are you looking at any companies in India as well?
Our entry into India was in 1999 through the acquisition of US-based Armedia Labs, which has its development centre in Bangalore. Our aggression for acquisitions will not change going forward and we are constantly looking for buyouts. Our primary focus is not geography but technology. Technology, unique product and patent portfolio and market share will be the primary criteria. If a company like that exists purely in India, then yes it is on our radar. There is always something on our radar, and if there is one in the pipeline, I will not be able to comment on that now.
Are you planning to expand your Bangalore and Hyderabad research and development (R&D) centres?
We follow the January-to-March financial year and our most recent quarterly announcement (for June 2010) of revenues of $1.6 billion was up 10 per cent sequentially quarter-on-quarter. As a company, we are growing extremely fast and that growth is demanding more headcount to support the products as well as the customers. So, this growth feels the need for more space. We are expanding our Bangalore centre from 80,000 sft to 175,000 sft while the Hyderabad centre is going to be 48,000 sft (consolidation of two prior offices) at the Tech Park. This expansion is intended at continuing to create ability to execute our global R&D projects as well as grow in size to accommodate increasing responsibilities of the amount of work that needs to be done.
What is the headcount that you plan to add in these two centres?
We are today a little over 500 employees across both centres and the expansion is part of our three-year planning. However, we do not share specific headcount numbers externally, if it is futuristic. One of the reasons being, we are a very aggressive acquirer of companies. And, M&As in a global context will always change the plan if the acquired company brings in its own headcount and geographic distribution. So, external sharing of exact headcount targets is less meaningful because what starts happening is that the accuracy can fluctuate quite a bit because of acquisitions. But internally, we have to do planning to make sure we have the right amount of space.
What role does India play in the overall R&D of the company?
Of the 8,075 employees worldwide, the engineering strength is 76 per cent. Now, India is primarily engineering, which actually is 10 per cent of our global R&D headcount, our largest and most diverse outside the US. Our Indian teams are usually set up as centres of excellence - taking ownership of a topic and then supporting global and local chip programmes - or taking up start-to-finish engineering programmes.
How many patents do you have from the India centres so far?
We have over 4,300 US and 1,800 foreign patents, with more than 7,900 additional pending patent applications. We have over 50 patents from India and it is a growing number. It is very difficult to put targets as not only do you have to file a patent application but you also need to get the government of some country to approve it. Consumer electronics, enterprise networking, wireless and cell phone technologies are really the areas of R&D contribution.
Where do you see India in the overall growth of the company?
India is a very important R&D centre, which is contributing to our global programmes. Its impact is very high on the company's top line and bottom line. And, global programmes are partly or entirely done out of India. I don't see that changing ... it will only continue this way.
