News & Analysis
ARM success could trigger takeover bid, says analyst
Peter Clarke
10/12/2009 9:34 AM EDT
In his note Scemama examines the costs of a number of different approaches to the privatization of ARM.
For example, the cash-generative nature of ARM's IP licensing business would makes the company attractive for a leverage buyout (LBO) by a private equity company or consortium. Such a group could borrow the $3 billion or so needed to buy ARM and then load the company with the debt, which its cash generation should, in theory, be able to service.
But such an outcome might not appeal to the licensees of ARM technology.
"With [ARM having] a 1.9 billion euro market capitalization [about $2.8 billion] this would require these ten companies to contribute 190 million euro [about $280 million] or less each. Although a large sum, we believe that many large OEMs, foundries and chipmakers would rather pay that amount than see ARM in the wrong hands," Scemama wrote.
Some things stand in the way of such an acquisition; one being the long-term semiconductor industry trend towards disaggregation. This disaggregation is one reason for ARM's existence as a chipless chip company. The second is that the Symbian foundation model as a means of keeping Intel and Microsoft out of the mobile phone industry has largely run out of steam. The appetite for such protective measures would seem less today than it did in the 1990s, when Symbian rose to prominence.
"I am not talking about re-aggregation, but about protecting a strategic asset," Scemama told EE Times. "Either you take the company private or a consortium could take a 30 or 40 percent stake as a blocking move."
As to the Symbian precedent, Scemama argued that the smartphone operating system was never a large enough part of the overall mobile phone landscape to capture the interest of all the mobile phone handset makers. The primary interest in Symbian had always come from Nokia. In contrast ARM is of strategic interest to scores of companies, Scemama said.
Related links and articles:
ARM will overtake Intel in netbooks, smartbooks, says analyst
Commentary: ARM's Osprey broadens the battle front with Intel
Intel increases stake in graphics cores provider Imagination
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someEmbeddedGuy
10/12/2009 9:49 PM EDT
Seems like the Intel acquisition is a long shot... I would hope there would be some anti-trust challenges for that one. There would be a true loss of genetic diversity in the processor world.
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Nic Cohen
7/30/2012 2:38 AM EDT
I quite agree! Sir
Nic - www.kdweb.co.uk
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jackOfManyTrades
10/13/2009 3:30 AM EDT
"Cambridge, England"
My country's not called "England" any more that yours is called "Texas". It's the "UK".
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embeded
10/15/2009 1:00 AM EDT
It's a HUGE jump to say that ARM/Linux will become so dominant that Microsoft will bow to pressure and port Windows 7 to the ARM architecture. This is viable only in the netbook arena (Intel clearly will maintain the lead in more powerful devices), and I'm not sure just how big netbooks will ultimately be (have you seen the drop in laptop prices recently?).
ARM will need something like a 2:1 cost and power performance advantage for it to displace Intel/Microsoft in the minds of most consumers. Otherwise the average consumer just won't bother with learning Linux and an unfamiliar new way of doing things. I just don't see ARM getting that kind of advantage.
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peter.clarke
10/19/2009 6:29 AM EDT
Embed-ed
Your points about the inertia associated with the incumbent (Intel-Microsoft) are well made.
However, one thing you don't discuss though is the role of different manifestations of Linux such as the Chrome browser and the Android operating system, which could quickly be very acceptable to the consumer. Is it not arguable that these days Google is more entrenched than Microsoft these days?.
As to the price crunch on laptops...i believe some people would pay a PREMIUM to have a smaller computer that they can carry around without hurting their back and with a battery-life that lasts all day.
Of course they might miss the big screen, but they can't use a big screen conveniently on the road, on the plane...and perhaps they can link up to a bigger screen when they get home...or get to work...if they need to.
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Louie M
10/20/2009 2:22 AM EDT
As a blogger you should be looking at Google Trends to see what the latest trends are going to be. Google Trends has always been useful to everyone. Google Trends is sometimes a wonderful metric for finding out just how illiterate our citizens are, and showcasing the lack of intelligence on their part recently, one of the top searches on Google Trends was for the word austere. If you had to look up austere, go get some href="http://personalmoneystore.com/payday-loans/ ">payday loans for a dictionary and then either drop it on your head, or get a lawyer and sue your school district, because you didn't get your money's worth!
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The MicroMan
10/21/2009 10:00 PM EDT
There is a Dallas, Texas. Nobody would argue whether it was also in the United States. Why the beef about Cambridge?
An acquisition of ARM by Intel would be a disaster. ARM is an IP licensor(er?). Intel punches out expensive chips. Intel ejected its hand in ARM when it sold off (most of) its interest in XScale. True, Intel would like to eliminate its competition.
Consumers don't give a darn what operating system is in their electronic gear. What's running your set-top box? If it works, and it is easy to figure out, people will buy. Nobody would miss a bloated bag of software that crashes. Or they're used to it enough on one platform that they'll accept it from another. And if it sells for $200 rather than $300, they'll buy even more.
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ibinger
9/15/2010 10:55 PM EDT
While we are not trying to replicate in these filters, [url=http://www.google.com/]google[/url] the FSE topology allows equalization beyond the Nyquist frequency of half the symbol rate, hardening the system to aliasing effects.
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Nic Cohen
7/30/2012 2:41 AM EDT
How interesting! How does that work exactly?
Regards
Nic
www.kdweb.co.uk
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ibinger
9/15/2010 10:55 PM EDT
http://www.google.com/
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JON-design
2/21/2012 3:20 AM EST
It is interesting how the industry works. A normal consumer would not be thinking about all these things going on in the background when he shops for a phone or device, but the war to stay afloat and ahead of competitors is very real and one wrong step could lead to a company having a monopoly in controlling the prices and supply.
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Duane Benson
2/21/2012 11:37 AM EST
The MicroMan has a very good point - to an extent. The typical consumer really doesn't care what processor is under the hood. They just want it to work and keep working. To many consumers, there isn't "Word", "Excel" and other applications. They just use Windows. To A large segment of the PC using public, all of these names and terms have no more meaning than does "Turbo Encabulator."
To counter that is the brand. People but Pepsi or Coke because they are loyal to the brand. Not because they have an understanding of the ingredients. When you look at a diet soda, people do understand the benefit there. Thus if Linux/Android/ARM noteboook makes can demonstrate a clear technological advantage, they can sell against Intel with that. If not, then they will have to spend gobs of money to create meaning in their brand with the consuming public.
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JON-design
2/27/2012 12:55 AM EST
I agree with someEmbeddedGuy, but not for the same reasons. An Intel buyout is a longshot because ARM is on the upswing, and they will ride this wave of success to the peak if they are smart. Buyouts happen when business starts to wane or at moments between successes not during them.
Jon - http://www.evosite.co.uk/
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