QLogic Hard Drives a Bargain

The company announces a deal to sell its hard-disk and tape-drive controller business to Marvell.
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QLogic

(QLGC)

will sell its hard-disk drive controller and tape-drive controller business to the

Marvell Technology Group

(MRVL) - Get Report

for $180 million in cash and $45 million in Marvell common stock, the company announced after the closing bell Monday.

Aliso Viejo, Calif.-based QLogic, which makes host bus adapters and other hardware for use in storage networks, also said it will repurchase up to $350 million of the company's outstanding common stock over the next two years. QLogic has repurchased $200 million of its common stock since January 2003.

The sale of the controller unit removes a question mark from the minds of investors, Punk, Ziegel analyst Steve Berg said in an interview. Originally, the unit acted as a buffer from the ups and downs of the company's core business.

But for the last three or four quarters, its performance has been problematic, said Berg, whose company does not have an investment-banking relationship with QLogic.

After a brief halt to trading, shares of QLogic were off a penny to $35.63 in after-hours trading. Shares of Marvell were also off, losing 7 cents to $46.34.