Vitesse Unloads Storage Business

Ailing Vitesse Semiconductor Corp. (Nasdaq: VTSS) is selling off most of its storage-area networking business as management tries to lift the company back to profitability.

The sale, announced late yesterday, pretty much ends the company's fling with storage, an area that attracted Vitesse's attention back when its telecom business was flagging.

Maxim Integrated Products Inc. (Nasdaq: MXIM), a vendor of analog and mixed-signal chips, has signed an agreement to buy most of Vitesse's storage portfolio, including its Serial Attached SCSI (SAS) and Serial Attached ATA (SATA) chips. The deal is expected to close by year's end.

The price is $63 million in cash, plus $12 million if the products reach certain milestones. Adding to its cash pile, Vitesse separately landed a $30 million loan yesterday. (See Vitesse Sells Off Storage.)

Not included in the deal are Vitesse's Fibre Channel devices, which topped out at 2 Gbit/s -- a bad bet on Vitesse's part, as the 4-Gbit/s Fibre Channel market took off and has been kind to companies like PMC-Sierra Inc. (Nasdaq: PMCS). Vitesse is also hanging onto its RAID-on-chip line.