IamSpartacus

1 Comment

    • ON: Tue May 6th 02:58 AM
      Commented on:
      What Is SiRF's Valuation?
      Vijay, I usually enjoy your articles, but this time, I think you're just being hopeful.

      Acquisition would've been a good idea last year (BRCM reportedly paid over 250M for GL). But pretty much anyone who wanted a GPS chip manufacturer, and had the cash to shell out for it bought one last year. BRCM bought GL, and MediaTek bought uNav.

      So who could buy SiRF? Most of the major semi companies already have their own GPS design groups (TXN, STM, BRCM, QCOM, ATHR). Most PND mfg's also make the low-end GPS chips in-house (GRMN, MediaTek).

      So who's left?
      -INTC: Doubtful. They don't want to be in anything but x86. Sold XScale to MRVL
      -MRVL: They made a *loss* last quarter. Their cash reserves are far below their closest competetitor (BRCM). And they really need to focus on reducing costs (and handling options backdating issues) in their core business.

      If SiRF *does* actually get acquired, I don't think it'll be at a big premium to their market cap. The company must be doing well, and there must be multiple suitors for there to be a big premium. When SiRF's only viable option is to get acquired (no-one buys their 'turnaround' strategy), I doubt if it'll get a big premium.

      As an example, recall PLAY (Portal Player). Its stock got tanked (a lot worse than SiRF though: it only fell 50%) when it lost the iPod nano contract. And it was bought by NVidia for a 19% premium. And NVidia really needed mp3 IP for its "Computer-on-a-ch... and had two-three billion in cash. Also, PLAY was making a nifty profit (as opposed to SiRF).

      But I've been wrong before ;)

      (Disclosure: I don't have a position in SiRF. I used to, but got lucky and sold last year at $27)
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