MaxLinear’s Acquisition of Entropic Raises Questions

– Are Broadcom’s SoCs with MoCA Winning the Deals?
– Is Wireline Home Networking about to Ebb As Wi-Fi Strengthens?
– Has G.hn Become a Factor in the Coax Market?
So this is how it ends for the company that invented the MoCA coax home network technology.

Entropic Communications, the inventor of MoCA, and the chipmaker MaxLinear have signed a definitive agreement for MaxLinear to acquire Entropic including the part that Entropic bought from Trident in an effort to compete against Broadcom’s MoCA technology, which Broadcom embeds at very little additional cost in SoCs that serve multiple purposes in a STB.

MaxLinear is heavily involved in providing chips that are in the products that are sold to cablecos, which are the largest buyers of products with MoCA chips. Among other products, MaxLinear makes chips for use in the cablecos’ STBs, DOCSIS modems, transport gateways and digital-cable ready TVs.

In addition to developing MoCA, Entropic also invented a direct broadcast satellite outdoor unit single-wire technology. Using technology it acquired from Trident, Entropic also developed the industry’s first set-top box SoC platform based on the ARM processor with advanced OpenGL graphics. It’s not clear whether MaxLinear will keep the Trident technology, sell the operation or close it down.

 

MoCA’s Future Looks Bright

It is certain that the market for MoCA has never been greater. The home networking market in China is just opening up and China’s many MDUs also need EoC (Ethernet over Coax) technology like MoCA to connect MDUs’ incoming fiber to each residence — a capability that MoCA can provide. (See this week’s story about Luster selecting MoCA for its EoC products: “Chinese Maker of Fiber Gear for Cablecos Joins MoCA,” pg 16)

Also, European cablecos have not yet taken to MoCA for whole-home DVRs in the way that US cablecos, DirecTV and Verizon have. AT&T and CenturyLink have not yet announced whether or which wireline home networking they’ll use although G.hn is known to be competing for their business. G.hn recently made a major breakthrough in China when China Telecom selected Marvell’s powerline G.hn chips, including having them embedded in TV sets their customers purchase. When you plug the TVs into the electrical outlet, the TV is automatically connected to the Internet — how easy for subscribers and it eliminates sending a technician into the home!

MoCA’s biggest competitor may turn out to be the supercharged versions of Wi-Fi, initially provided by chipmakers Celeno and Quantenna and now by traditional Wi-Fi chipmakers using the Wave2 version of 11ac Wi-Fi. Wireless home networking has the appeal of being easy to install; wireline has the advantage of guaranteed QoS, which becomes even more important to pay TV services with the coming of UHD TVs and 4K content.

Entropic’s MoCA chips are used in boxes by many major and minor cable, satellite, telephone and fiber service providers. It has about 1,500 issued and pending patents.

Entropic has also been developing a new industry-standard technology called VidiPath for use in a dongle that will allow existing TVs, PCs, tablets and smartphones to receive pay TV channels wirelessly throughout the home. Vidipath can be thought of as a CableCARD replacement that would work on any device and be compatible with both cableco and telco TV.

 

The Deal

MaxLinear said it sees “immediate cross-selling opportunities and longer-term platform integration opportunities with Entropic’s leading MoCA technology.” It did not say what that would be.

MaxLinear CEO Dr Kishore Seendripu said, “We are very excited about the opportunity to bring together two talented and largely complementary teams, as we increase our capabilities to solve the most difficult analog and mixed-signal RF challenges in broadband markets. We believe the scale and strategic benefits of a broader technology portfolio will enable us to accelerate our expansion into new markets more effectively. The financial benefits of the transaction should be immediately visible, as we expect non-GAAP earnings accretion in the first full quarter post-close.”

Based on MaxLinear’s closing stock price on February 2, 2015, the merger is valued at approximately $287 million. Shareholders of MaxLinear and Entropic will own approximately 65% and 35%, respectively. The deal is expected to close in the second quarter of 2015 “subject to approval by the shareholders of both companies, the receipt of regulatory approvals, and other customary closing conditions.”

MaxLinear’s fourth quarter 2014 revenue is expected to be in the range of $32 million to $33 million.

 

What If?

It’s worth listing some of the companies that might have but did not acquire Entropic — although they might yet buy the MoCA operation from Entropic:
Intel, which this week bought the telco technology specialist Lantiq and might want to add integrate MoCA into the technology it makes for cablecos and telcos’ STBs.
Qualcomm Atheros, which has Wi-Fi and HomePlug technology, could add coax home networking.
– A Chinese or Taiwan maker of home networking or broadband chips because …

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