Cypress Semiconductor Corp. is in talks with Lara Networks Inc. and is expected to announce a technology alliance as early as today aimed at boosting Cypress' presence in the network processing market.
It was unclear whether the agreement is to be structured as a joint venture, equity stake, or will take some other form. When reached late Tuesday, Kamal Gunsagar, founder and chief executive of San Jose-based Lara, denied speculation that Cypress will acquire the company outright but refused to discuss specifics of the talks.
Joe McCarthy, senior director of corporate communications for Cypress, also of San Jose, similarly declined to discuss the deal, although he confirmed an announcement is expected later today.
The agreement, which was to have been disclosed yesterday but was postponed at the last minute, is expected to help Cypress expand its presence in the network communications market. Lara Networks designs network database search engines (NDSE) that boost network processor performances in routers and switches. "Cypress is moving into communications and Lara's [co-processors] would definitely offer an interesting element to their package," said Will Strauss, an analyst with Forward Concepts Co., Tempe, Ariz.
Lara, a privately held company with additional offices in Nashua, N.H., and a design center in Bangalore, India, has attracted more than $57.5 million in investor financing, including $40 million secured in a funding round last October led by Raza Ventures. In November, STMicroelectronics Inc. took a minority equity stake in the company and licensed its Associative Processing Technology with the intention of developing and marketing Lara's LNI7010 and LNI7020 NDSE devices.
Though Cypress has been acquisitive -- particularly in the communications area -- Strauss said a purchase of Lara would be difficult to muster given the company's fiscal condition. On Monday, Cypress lowered its second quarter revenue projections by $25 million, saying its now expects revenue in the $175 million to $185 million range, a quarterly sequential decline of about 30%.