SAN JOSE, Calif. - Moving into a new market amid an IC slowdown, Zoran Corp. has entered into a definitive agreement to acquire Microtune Inc. for $166 million.
The move puts loss-ridden Zoran in the RF tuner market. Microtune, a pioneer in the development and deployment of silicon tuners for cable set-top-box, broadband cable modem, DTV, and automotive entertainment markets.
Zoran is increasing its focus on the set-top-box market as part of its strategy to become a complete provider of solutions for consumer home entertainment. Zoran sells chips for DTV, set-top box, DVD, digital camera, multimedia mobile phone and multifunction printer applications.
Under the agreement, Zoran will pay $2.92 in cash for each share of Microtune’s common stock, resulting in a transaction price of approximately $166 million, or $84 million net of cash acquired. Both boards of directors have approved the transaction, which is expected to close after Microtune shareholder approval, regulatory clearance and satisfaction of customary conditions specified in the agreement. Zoran expects the acquisition to be accretive immediately following the close of the deal, which is expected to be in the fourth quarter of 2010.
Last month, Zoran recently reported results for its second quarter ended June 30, 2010. Revenues for the second quarter were $93.4 million, compared to $90.5 million last quarter and $102.7 million for the second quarter of 2009. The company reported a second quarter GAAP net loss of $6.7 million, or $0.13 per share, which compares with a GAAP net loss of $4.0 million, or $0.08 per share, for the previous quarter and a GAAP net loss of $13.8 million, or $0.27 per share, for the second quarter of the prior year.
“The results of the second quarter were mixed, with digital cameras once again out-performing expectations, while DTV continued to face challenges,” said Levy Gerzberg, president and chief executive of Zoran, when it announced its results.
“Our outlook for DTV for the remainder of the year has been substantially reduced, primarily due to customer program delays and customer share loss to tier-1 brands. We believe our leading edge Frame-Rate-Conversion solution as well as our internet connected SOCs, which started shipping with a tier-1 DTV manufacturer during the quarter, will drive additional customer wins in the future. In digital cameras, we believe we are gaining market share and are seeing new opportunities for growth in segments such as DSLR and HD video recording. Printer Imaging is recovering and we are beginning to ship our highly-integrated Blu Ray solution,” he said.
The company is currently expecting third quarter 2010 revenues to range between $98 million and $103 million. The company expects to record a third quarter GAAP loss in the range of $0.09 to $0.11 per share.
Last month, Microtune reported preliminary unaudited financial results for the second quarter ended June 30, 2010. Net revenue for the second quarter of 2010 was $24.3 million, a 9 percent increase compared to net revenue of $22.4 million for the first quarter of 2010, and a 39 percent increase compared to net revenue of $17.6 million for the second quarter of 2009. Q2 2010 GAAP net income was $0.4 million, or $0.01 per diluted share, compared to Q2 2009 GAAP net loss of $4.0 million, or $0.08 per diluted share.