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Silicon Labs buys SpectraLinear
1/26/2011 1:22 PM EST
SAN JOSE, Calif. - Silicon Laboratories Inc. has aquired SpectraLinear Inc.,
a supplier of integrated timing solutions, for approximately $40 million.
But is Silicon Labs itself a takeover target? ''Stepping back, while Silicon
Labs is a great company with tremendous mixed-signal technologies and
products, and could be an attractive acquisition target for Texas
Instruments or other large firms,'' said Craig Berger, an analyst with FBR,
in a research note prior to the results and acquisition announcement.
In any case, the deal with SpectraLinear represents Silicon Labs' second
acquisition in the IC timing arena in recent times. SpectraLinear’s clock
products complement Silicon Labs’ existing timing product line by adding a
broad family of ICs that Silicon Labs believes will accelerate penetration
of the approximately $500 million opportunity in high-volume applications.
SpectraLinear’s products are optimized for consumer electronics and
embedded applications, such as portable media players, residential gateways
and digital cameras.
SpectraLinear is based in Santa Clara, Calif., with design centers in
Bangalore, India, and Istanbul, Turkey. The acquisition will bring 19
patents issued or pending and a team of 44 employees to Silicon Labs. The
acquisition is expected to be accretive to earnings, excluding the
amortization of intangibles, in its first full quarter of operations in
In 2006, SpectraLinear acquired Cypress Semiconductor's PC clock division,
establishing itself as a pure-play integrated timing device company.
Silicon Laboratories, a supplier in high-performance, analog-intensive,
mixed-signal integrated circuits (ICs), also reported its results. Fourth
quarter revenue of $112 million exceeded guidance and represented a 7
percent sequential decrease.
It reported a net of $12.883 million, or $0.28 a share, in the quarter,
compared to $40.251 million, or $0.84, a year ago. The company guided
revenue for the first quarter in the range of $116 to $122 million.
Commenting on the results, Ian Ing, an analyst with Gleacher & Co.,
said: ''SLAB reported a $0.09 EPS beat largely on tax reversal and revenue
above the guided range, but offset by a weak gross margin as TV tuners ramp
in initial volumes. Revenue guidance was above the Street, but leverage
comes out of many models due to 1) gross margin guided to lower-end of the
62-65 percent target range, and 2) operating expense climbing 6 percent or
$4 million q/q on SpectraLinear acquisition (silicon clocks) and FICA
tax/merit raise impacts. Full year segment guidance implies revenue growth
in the high single-digits, as the video business grows to roughly $60
million from $20 million on ramps in TV tuner ICs.''
Silicon Labs has been on an acquisition spree. In April of 2010, Silicon
Laboratories announced the acquisition of Silicon Valley-based Silicon
Clocks, an early stage company creating microelectromechanical system (MEMS)
technology. Silicon Clocks’ CMEMS (CMOS+MEMS) technology is aligned with
Silicon Labs’ efforts to leverage its CMOS-based timing products into
high-volume applications such as consumer electronics.
In October, Silicon Laboratories announced the acquisition of Ireland-based
ChipSensors Limited, an early stage technology company creating single-chip
CMOS sensors designed to detect temperature, humidity and gases. ChipSensors’
technology complements Silicon Labs’ touch, proximity sensing and recently
acquired MEMS technology, expanding the company’s capabilities in CMOS-based
''Clocks are big business; in fact, timing grew by 70 percent for us in
2010, and is now more than 10 percent of our revenue,'' according to a
spokeswoman for Silicon Labs. ''We acquired Silicon Clocks for their
CMOS-based MEMS technology, which we’re applying initially to timing. And
then we announced the acquisition of SpectraLinear, a revenue generating
private company that sells clocks into high volume embedded and
consumer applications. Both acquisitions target a part of the market we had
previously not addressed, allowing us to really become a one stop timing