ECONOMICS

Applied Micro Circuits Corporation announced that it has signed a definitive agreement to acquire 3ware(R), Inc. 3ware provides high-performance, high capacity Serial ATA (SATA) storage solutions for emerging storage applications such as disk-to-disk backup, near-line storage, network-attached storage (NAS), video, and high-performance computing. Under the terms of the agreement, AMCC will acquire all outstanding shares of 3ware for approximately $150 million in cash and will assume stock options based on an exchange ratio to be determined at closing. Based on yesterday's closing price, AMCC expects to assume options to purchase approximately five million AMCC shares. The transaction is subject to certain customary closing conditions and regulatory approvals, and is expected to close at or around April 1, 2004, and is therefore not expected to affect AMCC's March quarter results. AMCC expects this transaction to be non-dilutive to its pro-forma earnings per share for the June quarter. In connection with this transaction, AMCC expects to record certain acquisition-related charges, however the timing and magnitude have not yet been determined. The boards of directors of both AMCC and 3ware have approved the acquisition agreement. "One of the fastest growth segments in storage today is SATA RAID and 3ware has achieved significant market penetration with a switched architecture that delivers performance, scalability and the economy of SATA," said Dave Rickey, chairman, president and CEO of AMCC. "3ware's customers and channel relationships complement our existing small and medium business Fibre Channel Host Bus Adapter (HBA) strategy, while extending our reach into the direct- attached (DAS) and network-attached storage (NAS) segments of the industry." "AMCC's semiconductor leadership and its Fibre Channel SAN expertise from the recent acquisition of JNI allow us to broaden our market opportunity by leveraging valuable intellectual property and infrastructure," said Faye Pairman, president and CEO of 3ware. "Combining with AMCC will enable us to accelerate our complementary product roadmaps and penetration into higher-end storage applications." 3ware currently employs approximately 70 people, the majority of whom are in the Sunnyvale, CA headquarters. The 3ware team, including President and CEO Faye Pairman, will report to Brent Little, AMCC's senior vice president and SAN general manager, as part of AMCC's global SAN business.