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LSI beefs up networking portfolio with acquisition

Posted: 07 Sep 2007 ?? ?Print Version ?Bookmark and Share

Keywords:LSI networking portfolio? Tarari acquisition? networking security?

LSI Corp. has signed a definitive agreement to acquire Tarari Inc. for approximately $85 million in cash.

With the acquisition, struggling LSI will expand its portfolio. Tarari, which has 45 employees, is a privately held maker of silicon and software that provides content and application awareness in packet and message processing.

"Through the acquisition of Tarari, LSI will now add best-in-class content processing capabilities to our broad portfolio of networking and storage solutions," said Jeff Richardson, LSI's executive VP of the network & storage products group (NSPG), in a statement.

"These new capabilities will allow service providers and enterprises to deliver advanced services like security, telepresence, unified access, and video over next-generation networks," he said.

Upon closing, the Tarari team and products will be integrated into the NSPG organization reporting to Richardson.

Meanwhile, LSI has also divested non-core product units, by recently selling its mobility chip line to Germany's Infineon Technologies AG. The value of the deal is $450 million in cash, plus a performance-based payment of up to $50 million payable in the first quarter of 2009.

As part of the transaction, approximately 700 employees from LSI will transfer to Infineon. The transaction does not include production facilities.

Originally, LSI's mobility products group belonged to Agere Systems. In April, LSI acquired Agere for $4 billion, but there have been some major integration issues between the two entities.

Who is LSI?
In addition, LSI has divested a number of other product units in recent times, leaving many to ponder a simple question: Who is LSI?

In a major restructuring effort, the ASIC pioneer, formerly known as LSI Logic, last year exited the ASIC market. At about the same time, the company also went fabless and sold its Oregon fab to On Semiconductor Corp.

Also last year, China's VeriSilicon Holdings Co. Ltd acquired the ZSP DSP unit of LSI. And in June of 2007, amid a move to cut 900 jobsor 13 percent of its workforceLSI sold its consumer-chip business to Magnum Semiconductor Inc.

Last month, LSI continued its cost-cutting efforts. It signed a definitive agreement to sell its semiconductor assembly and test operations in Pathumthani, Thailand to STATS ChipPAC Ltd for $100 million.

LSI also announced that it will transition semiconductor and storage systems assembly and test operations performed at its facilities in Singapore and Kansas in the United States to its current contract manufacturing partners. As part of those actions, LSI eliminated approximately 2,100 production positions worldwide.

Last month, LSI reported Q2 2007 revenues of $670 million, compared to $490 million in the Q2 2006 and $465 million in Q1 2007. Q2 2007 GAAP net loss was $378 million, or minus 50 cents per diluted share, compared to second quarter 2006 GAAP net income of $54 million, or 13 cents per diluted share.

- Mark LaPedus
EE Times

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