Wednesday, September 10, 2008

Ire at IR

On the surface it seemed to make sense. On August 15 Vishay made an unsolicited offer of $1.6 billion to acquire International Rectifier, a venerable company whose discrete power-management IC product lines would complement Vishay’s. IR had fallen on hard times, their stock had tanked, and Vishay apparently saw this as an acquisition opportunity. IR, in turn, just saw it as opportunistic and rejected the offer out of hand. As Richard J. Dahl, IR’s Chairman of the Board, put it in his response, “Your proposal is inadequate, opportunistic and not in the best interests of International Rectifier and its shareholders.”

Not being one to give up easily, on September 9 Vishay increased its offer slightly to $1.7 billion and announced its intention to nominate three candidates to IR’s board. This is reminiscent of Carl Icahn’s move on Yahoo’s board after they repeatedly rejected Microsoft’s buyout offer. Jerry Yang still has his job but no longer his job security. Whether Oleg Khaykin, IR’s CEO, winds up in the same position remains to be seen.

Vishay rightly sees an IR acquisition as complementing its product lines, though whether their cultures are complementary is unclear. What is clear is that Vishay can’t afford to leverage itself too much farther in order to top up its offer, though if it did get the support of both boards, it could raid IR’s cash kitty of $700 million to complete the financing.

An old line company with strong market share, depressed stock and a big cash stash is a tempting takeover target. IR is a proud company and wants to work its way out of the doldrums. Vishay is facing a market with shrinking liquidity, so raising the cash won’t be easy.

Stay tuned to see how this shakes out.

The Androids Among Us

The buzz is we’ll have Androids in time for Christmas. The FCC has approved the HTC Dream, the first handset based on Google's Android mobile platform. According to an AFP report, T-Mobile will launch the device, probably in time for Christmas sales. the Washington Post reports that the HTC Dream will feature a touchscreen, Wi-Fi, a BlackBerry-style 'jogball,' a Safari web browser, and Google applications such as Gmail, Maps, and YouTube.

Meanwhile the Android Software Development Kit (SDK) is still in beta test, though Google recently released version 0.9, which it claims is “now pretty stable and we don’t expect major changes.” This is a pretty unproven platform on which companies are expected to make multi-million dollar bets. Still, the lure of avoiding paying licensing fees to Microsoft or Symbian for their mobile OS’s has induced a lot of big players to sign on with Google’s Open Handset Alliance.

Android may take a while to get its legs under it, but it’s certainly a well-funded startup and one that’s already creating huge waves in the handset market even before it’s finalized. This will be an interesting ride.

CEO Interview: Necip Sayiner, Silicon Labs

While Austin-based Freescale and AMD have been taking their lumps of late, Silicon Laboratories (SiLabs) quietly continues to be a major Austin success story. It’s admittedly easier when you’re not taking aim at the big dogs—and thus not winding up in their cross hairs—but SiLabs has continued to innovate its way to healthy growth for a number of years now in highly competitive wireless markets.

SiLabs is a fabless semiconductor company focused on high-performance, analog-intensive, mixed-signal ICs. Their biggest revenue generators are their VoIP and embedded modem products, the latter being widely used in high-definition set-top boxes. Their CMOS FM tuners are designed into mobile handsets by virtually every manufacturer, and they’ve recently introduced a 3x3 mm AM/FM receiver. In the horizontal space, they’ve shipped over 100 million low-cost, mixed-signal MCUs and 100,000 development kits. This mixed vertical/horizontal strategy has resulted in a GAAP gross margin of 63% for the latest quarter and a 38% increase in revenues over the same quarter last year.

In March, 2007 SiLabs sold its AERO RF transceiver line to NXP for $285 million. Using some of the cash from the sale, in January SiLabs bought Integration Associates, who make ASSPs for short-range wireless and audio subsystems. Much of the rest of the cash is earmarked for SiLabs’ extensive R&D pipeline.

Portable Design sat down recently with SiLabs’ CEO Necip Sayiner to ask about its products, its business model and its plans for the future.