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Analog takeover: Who's the next target?

Posted: 09 May 2011 ?? ?Print Version ?Bookmark and Share

Keywords:acquisitions? mergers? analog market? stocks? analog vendors?

There has been much speculation about the next big acquisition in the analog space following Texas Instruments Inc.'s move to buy National Semiconductor Corp. for $6.5 billion.

Some predict a wave of acquisitions in analog. Others see a slowdown in the merger and acquisition (M&A) world.

Because of the high premium that TI is paying for National, the stock prices for many companies have soared, thereby creating a seller's market in the M&A world. The TI-National deal ''hurt the M&A industry,'' said Steve Sanghi, president and CEO of Microchip Technology Inc., in an interview at the Embedded Systems Conference (ESC). Following that blockbuster, several chip makers saw their stocks jump by up to ''35 percent to 40 percent without even getting an offer.''

If or when the market comes back to earth, the analog world is ripe for acquisition. ''There is an increased interest in M&A,'' said Steve Ohr, an analog semiconductor analyst at Gartner, in an interview at ESC.

The mega-mergers could be an exception to the rule. The sweet spot for acquisitions is for mid-sized companies in the $100 million to $200 million range, Ohr said.

Ohr did not identify the potential takeover targets, but here are some possibilities:

Advanced Analogic Technologies Inc. 每 Analog vendor continues to spill red ink.

The company recently said revenue for the first quarter of 2011 was $20.5 million, compared to net revenue of $21.9 million for the first quarter of 2010, and $24.0 million for the fourth quarter of 2010. Net loss for the first quarter of 2011 was $7.7 million, or $0.18 per diluted share, including non-recurring charges for patent litigation and severance-related expenses. This compares to a GAAP net loss of $4.2 million, or $0.10 per diluted share, for the first quarter of 2010 and a GAAP net loss of $3.3 million, or $0.08 per diluted share, for the fourth quarter of 2010.

Intersil Corp. 每 Too big to swallow?

Net revenues for the first quarter were $198.9 million, a 5 percent increase from $189.4 million in the first quarter of 2010, and a 3 percent increase from $194.0 million in the fourth quarter of 2010. Net income for the first quarter of 2011 decreased to $14.1 million, or $0.11 per diluted share, compared with net income of $27.7 million, or $0.22 per diluted share, in the same quarter last year, and net income of $26.1 million, or $0.21 per diluted share, in the fourth quarter of 2010.

Monolithic Power Systems Inc. 每 Missteps have hurt the company.

The company recent reported revenues of $44.5 million in the quarter, a decrease from $47.1 million in the fourth quarter of 2010 and $50.3 million in the first quarter of 2010. GAAP net income was $1.9 million, with GAAP earnings per share of $0.05 per diluted share.
Comparatively, GAAP net income was $6.4 million, with GAAP earnings per share of $0.17 per diluted share for the quarter ended March 31, 2010.

Power Integrations Inc. 每 Chip maker could be too expensive.

The company said revenues for the quarter were $76.8 million, up seven percent compared with the first quarter of 2010, and up five percent compared with the fourth quarter of 2010. Net income was $9.9 million or $0.33 per diluted share, compared with $0.42 per diluted share in the year-ago quarter and $0.30 per diluted share in the fourth quarter of 2010.

Volterra Semiconductor Corp. 每 A diamond in the rough?

The company recently said revenue for the first quarter of 2011 was $34.2 million, a 6 percent decrease from $36.3 million in the first quarter of 2010, and a 4 percent decrease from $35.5 million in the fourth quarter of 2010. GAAP net income was $2.7 million, or $0.10 per share (diluted), as compared to $7.7 million, or $0.30 per share (diluted) in the first quarter of 2010, and $3.4 million, or $0.13 per share (diluted), in the fourth quarter of 2010.

Who are the consolidators or companies that are interested in M&A?

Maxim Integrated Products Inc. 每 Making strategic acquisitions.

Microsemi Corp. 每 Continues to buy niche companies in mil/aerospace.

On Semiconductor Corp. 每 Buying companies at a frantic pace.

Texas Instruments 每 Will take time to swallow National.





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