Billion-dollar deal second-guessed
By Brian Fuller , EE Times
August 27, 2004
URL: eetimes.com
San Mateo, Calif. — The billion-dollar price tag of the ARM-Artisan Components deal raised eyebrows last week. Some questioned whether, without major cost savings in the channel, complementary products and cooperative sales efforts justified the price.
If that is too great a premium just for Artisan's revenue stream, then ARM must have something else in mind, though what that might be is far from clear. ARM business-development manager Mark Ross pointed to the statement from ARM UK that by the end of 2005, the purchase would not be dilutive to ARM shares. That projection appears to forecast faster growth in both revenue and earnings than what either company now achieves separately.
Both ARM and Artisan in some ways have been victims of their own success, struggling with lower growth in part because they have dominated their respective markets. As one industry executive put it, "There's not a lot of new customers out there for Artisan; just about everybody uses them already." ARM, with its huge share of the CPU IP market, is in a similar position.
But Mark Templeton, Artisan's president and CEO, bristled that "Artisan has over 2,000 customers today. Our channel is working very well, thank you."
Gartner Dataquest Inc. analyst Jim Tully said the deal "allows ARM to put together nicely tuned and optimized platforms that are quite attractive for emerging consumer companies, notably in India and China. ARM's platforms are going to be attractive to experienced chip designers but also to companies with lesser experience."
Moreover, it's conceivable that by combining forces, the companies could achieve higher average license fees. This would suggest either an anti-competitive move — such as using proprietary libraries for ARM cores and requiring that ARM users license Artisan libraries — or an enrichment of the products' perceived value.
ARM chairman Lucio Lanza dismissed any notion that the merger would give ARM exclusive access to silicon-accurate cells. ARM is expected to leave the Artisan libraries open. |
