Network chip maker Applied Micro Circuits (AMCC) has moved into the storage area networking market by acquiring JNI for approximately $190m (£120m).
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JNI makes Fibre Channel host bus adapters and a range of other hardware and software products used in storage area networks, or Sans. Its brands include FibreStar, Emerald and EZ Fibre.
The acquisition will help AMCC to expand beyond its existing business of providing chips for wide area networks into what it hopes will be a fast-growing and profitable market for San products.
Fibre Channel has achieved "mass-market acceptance" and JNI is positioned well to take advantage of that with its products for Microsoft Windows and Sun Microsystems Solaris environments, said Dave Rickey, chairman, president and chief executive officer of AMCC.
However, JNI's sales have been declining. It reported a loss of $6.6m (£4.2m) for the second quarter ending 30 June, on revenue of $5.8m.
That revenue figure was down from $10.9m in the second quarter of 2002, reflecting a decline in sales across all its product lines.
As part of its growth strategy, the company planned to enter the Windows market and release several products in the coming quarters. JNI predicted revenue growth of 50% to 60% in 2004 and said it would break even by the end of 2004.
The acquisition is expected to close in the fourth quarter subject to the approval of JNI's stockholders and other standard conditions.
JNI's products include Fibre Channel host bus adapters, InfiniBand host channel adapters, storage application specific integrated circuits and software. Its products also work on HP-UX, AIX and Linux systems.
James Niccolai writes for IDG News Service