AUSTIN, Texas Network processor startup Wintegra Inc. has postponed its initial public offering, due in part to weakness in the communications sector and following Marvell Semiconductor Inc. decision to buy Intel Corp.'s wireless processor business.
Wintegra, based here, had planned to begin selling 4.9 million shares to brokerages and institutional investors Tuesday evening, and to commence public trading on Wednesday.
However, Marvell's announcement early Tuesday (June 27th) that it would spend $600 million to buy the wireless processor business from Intel was frowned on by investors. Not only did Marvell's share price drop by about 15 percent on Tuesday, the entire comms sector was dragged down by about 4 percent.
Robert O'Dell, vice president of marketing at Wintegra, said Thursday (June 29th) that Wintegra executives and its main backers made the decision to postpone the IPO Tuesday after the close of the stock markets. Wintegra has enough cash in hand, and is cash-flow positive. Investors decided Tuesday to "wait and get a better deal for the company later," he said.
Wintegra founded in 2000 former Motorola managers Kobi Ben-zvi, now Wintegra's CEO, O'Dell, and others now has 107 employees, with about 25 of them based in Austin. Chip design is done Ra-anana, Israel, and software development is split between Austin and Israel.
Last year, Wintegra had revenues of $19.6 million, with a profit of $194,000. In the first quarter of 2006, the company had sales of $7.1 million and a profit of $762,000, he said.
Before the scheduled IPO this week, Wintegra had dropped the range of its initial price from $14 to $16 to a range of $12 to $14. That 20 percent reduction came after the overall stock markets fell by about 15 percent in May and June, reflecting fears of inflation, interest rate jitters, and other macroeconomic issues.
"The basic climate for our networking business is fundamentally good," O'Dell said. However, the issues with the larger stock market, and the weakness in the communications sector in general following Marvell's bombshell, created a weak climate for Wintegra's IPO.
"It is just a matter of getting the right value for our investors," O'Dell said