LSI got a good deal, but they used depressed shares to buy depressed shares. .79 of $80 shares sounds good? EE Times...........................................
eet.com
LSI Logic to buy C-Cube for $878M in stock
By Will Wade
EE Times
(03/26/01, 7:11 p.m. EST)
SAN MATEO, Calif. — In a bid to increase its role in the home electronics space, LSI Logic Corp. has announced the acquisition of C-Cube Microsystems Inc. in a stock swap valued at some $878 million. The deal will allow LSI to integrate C-Cube's video compression and storage technologies into set-top boxes that take advantage of broadband connectivity.
"The acquisition of C-Cube will enhance LSI Logic's technology strengths in designing and manufacturing complete solutions for customers in rapidly growing communications and broadband entertainment markets," said Wilfred Corrigan, chairman and chief executive officer for Milpitas, Calif.-based LSI. "The synergy of these two technology leaders is consistent with our business strategy of capitalizing on the convergence of worldwide communications and broadband entertainment."
LSI will exchange 0.79 of its own shares for each outstanding share of C-Cube. The deal is expected to be finalized next quarter, and should contribute to LSI's overall revenues by the end of this year.
Milpitas, Calif.-based C-Cube was one of the pioneers in developing the MPEG video compression formats, and its main target markets include DVD players, recordable DVD systems and video storage systems that can record TV programs for later playback.
Although LSI is best known as an ASIC vendor, it also has a significant business in selling standard products, and consumer electronics is one of its main target markets. "This deal makes a lot of sense, and it all ties into LSI's plans to develop broadband infrastructure," said Tony Massisimini, chief of technology for Semico Research Corp. (Phoenix). LSI already has MIPS-based processor cores in its portfolio, which can be used for set-top boxes or home gateway systems used at the center of a home network, which are connected to the Internet through either a cable or DSL line. "It makes a lot of sense for LSI to integrate its MIPS cores with C-Cube's video stuff, if it wants to go after that STB/home gateway space," he said.
Corrigan also noted that the combined technology portfolio includes components for cable, DSL and satellite links to the Internet, which are the three main contenders for space in the wired living room.
"I am excited about the tremendous synergies between C-Cube's and LSI Logic's products, markets and customers in the broadband entertainment market," said Umesh Padval, C-Cube president and chief executive officer. "LSI Logic complements C-Cube very well in achieving the leading position in the networked digital home."
Bob Merritt, senior analyst for Semico, said that C-Cube had good technology, but was too small a player to see its products widely disseminated in the high-volume consumer market. "For C-Cube to have a big impact, it would have to move further up the food chain, and that's what LSI had to offer," he said. "Now C-Cube will get more exposure. This deal is a great fit for both companies." |
