No company is an island. With three major acquisitions last week, Cisco Systems Inc., ARM Ltd. and Eastman Kodak Co. have demonstrated that many firms are involved in the mobile world. The trend is not restricted to the smaller firms whose consolidation announcements flood the media almost every week.
These three deals, which totaled more than $1 billion, put a marquee stamp on the flurry of mergers and acquisitions as speculation of bigger ones still spice the industry. The acquisitions, according to analysts, also underscore efforts by wireless players to raise the stakes in solutions and applications as the battle for market share intensifies.
Cisco bought P-Cube for about $200 million in cash and options; ARM acquired Artisan for about $913 million in cash and stock; and Eastman Kodak agreed to lap up the imaging unit of National Semiconductor Corp. for an undisclosed amount.
Cisco said the acquisition of P-Cube will afford its operators the capabilities to control and manage advanced Internet Protocol services such as Voice-over-IP, interactive gaming, video-on-demand and peer-to-peer networking, in addition to other offerings that could differentiate the company.
Cisco said service providers can identify subscribers, classify applications, improve service performance and charge for multiple IP services without costly infrastructure upgrades.
“Application and subscriber-aware technology solutions like P-Cube’s provide the ability to differentiate and control content-based data services,” commented Mike Volpi, senior vice president and general manager, routing technology group at Cisco. “This technology complements Cisco’s overall portfolio of broadband EDGE products.”
P-Cube’s solution enables service providers to inspect packet data, allowing them to analyze, control and meter application and content-based services.
The deal is expected to close in the first quarter of Cisco’s fiscal year 2005, said Cisco. Once the deal is complete, the P-Cube team will report to Pankaj Patel, president and general manager of Cisco’s broadband and midrange routing business unit. P-Cube has 118 employees.
In the ARM acquisition of Artisan, both companies hope to deliver what they describe as “one of the industry’s broadest portfolios of system-on-chip intellectual property.” Artisan is located in Sunnyvale, Calif.
Both companies say their activities have been overlapping through the years with ARM’s channels of more than 130 silicon manufacturers and Artisan’s of more than 2,000 company customers. The deal is expected to close by the fourth quarter.
ARM CEO Warren East will continue as the CEO of the combined companies, with Lucio Lanza, Artisan chairman, and Mark Templeton, Artisan president and CEO, joining the board as a non-executive director and an executive director, respectively.
Artisan makes physical IP components for the design and manufacture of complex SoC integrated circuits. ARM, which does business with leading Electronic Design Automation companies, licenses its ARM core architecture present in most handsets.
Artisan’s shares jumped $4.26, or nearly 18 percent, to $28.14 after ARM announced the $913 million deal. ARM’s shares, however, dropped $1.03, or 18.7 percent, to $4.48. Investors are worried that ARM may have overvalued the deal.
Eastman Kodak said it acquired NSC’s imaging unit to strengthen its design and development capabilities.
“The addition of the imaging business from National will further strengthen our CIS (CMOS image sensor) design and development expertise as we target high volume applications such as consumer digital still cameras and camera phones,” said Chris McNiffe, general manager of Kodak’s image sensor solutions organization and vice president of its display and components division.
As part of the deal, Kodak will acquire certain assets, including intellectual property and equipment, and plans to hire about 50 employees now working with NSC.
NSC sold its cellular baseband business last year with a loss of 340 jobs. Eastman Kodak has played in the wireless space for a couple of years with various carriers and vendors. It inked a deal with Verizon Wireless, which will make its Mobile Service available on the carrier’s Get It Now program. The program allows users to view, share, organize and store their digital photos in one place. Last year, Nokia Corp. entered an agreement to allow Kodak solutions in its GSM/W-CDMA phones.
