Shares of companies that make chips for TV displays climbed Tuesday morning on news that one of their rivals, Genesis Microchip Inc. (GNSS), has agreed to a $336 million acquisition by Swiss semiconductor giant STMicroelectronics NV (NYSE:STM).
Shares of Trident Microsystems Inc. (TRID) climbed 12.25%, and Pixelworks Inc. (NASDAQ:PXLW) climbed 3.6%.
It's been a tough market, with intense price competition for digital video chips that are becoming increasingly commodity-like and provide shrinking margins. Demand for high-end TVs also has been slipping recently.
Mountain View, Calif.-based Genesis' first trip to the altar four years ago, had it succeeded, would have given it a bit more scale to do battle in this competitive market. Genesis was set to merge with Pixelworks in 2003 for $600 million, but the deal fell apart because of the foibles of its former CEO James Donegan, whose dishonesty in court dealings and merger discussions ended up costing him his job and the Pixelworks deal.
Presumably the STMicro deal won't follow the same route. Genesis investors have given it an initial thumbs-up, anyway. Shares of Genesis were up 57%, to $8.48, Tuesday on news of the deal. - Olaf de Senerpont Domis