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Zoran in deal to pocket Microtune

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CIOL Bureau
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SAN JOSE, USA: In the midst of an IC slowdown, Zoran Corp. has entered into a definitive agreement to acquire Microtune Inc. for $166 million, according to EETimes report.

This puts Zoran, which is running at a loss, in the RF tuner market. Microtune is a pioneer in the development and deployment of silicon tuners for cable set-top-box, broadband cable modem, DTV, and automotive entertainment markets.

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As part of its strategy to become a complete provider of solutions for consumer home entertainment, Zoran is increasing its focus on the set-top-box market. The company currently sells chips for DTV, set-top box, DVD, digital camera, multimedia mobile phone and multifunction printer applications.

Zoran will be paying $2.92 in cash for each share of Microtune’s common stock, and transaction price will come up to approximately $166 million, or $84 million net of cash acquired. Boards of directors of both companies have approved the transaction, which is expected to close after Microtune shareholder approval, regulatory clearance and satisfaction of customary conditions specified in the agreement.

Zoran reported results for its second quarter ended June 30, 2010 - second quarter revenues were $93.4 million, compared to $90.5 million last quarter and $102.7 million for the second quarter of 2009. A second quarter GAAP net loss of $6.7 million, or $0.13 per share, was reported which compares with a GAAP net loss of $4.0 million, or $0.08 per share, for the previous quarter and a GAAP net loss of $13.8 million, or $0.27 per share, for the second quarter of the prior year.

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Sources said the company has been bogged down by customer program delays and customer share loss to tier-1 brands. They say the company is focused on bringing in additional customers through their leading edge Frame-Rate-Conversion solution as well as the internet connected SOCs, which have started shipping with a tier-1 DTV manufacturer during the quarter.

They are also optimistic of advancing in the digital camera segment where they are gaining market share and looking at new growth opportunities in the DSLR and HD video recording segments. They are also starting to ship their highly integrated Blu Ray solution, said the sources.

The company is currently expecting that third quarter 2010 revenues will be between $98 million and $103 million and expects that third quarter GAAP loss will be in the range of $0.09 to $0.11 per share.

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