How will they get along? They both were Long Island companies a few decades ago -- there was for a while a mixture of sales and marketing types. And the current Engineering head is ex-Microchip (when it was called General Instrument Semiconductor.)
And, if course, because it is Long Island it is technically the best.
Working for a media company whose office is located in Long Island, I do have to agree with you, Tom. Ha, ha.
But seriously, this is a BIG acquisition for Microchip; and a big change for SMSC. A lot of people's lives will change.
I wouldn't necessarily call SMSC's business blanketly "low-margin" business, though. SMSC has a collection of unique, proprietary technologies -- incluidng Kleer and MOST. SMSC's business always fascinated me.
Hi, yalanad. It's true that the computer and consumer business these days is often regarded as "low-margin," and those in the financial community (and obviously our readers too)are averse to that.
But look. SMSCís annual sales is $412 million and it's got 54.4 percent non-GAAP gross margin. My friend, that is NOT bad.
However, you do ask a good question. Why did SMSC start looking to be sold?
A little over a year ago, SMSC was on its own expansion plan, and it was going to buy Conexant.
But the deal fell through, as Conexant went to Gold Holdings, Inc., an affiliate of San Francisco-based private equity firm Golden Gate Capital.
I would love to get a chance to sit down with Christine King, SMSC CEO, and ask her what prompted this sale.
SMSC is in a quiet period and nobody at SMSC is talking at this point.
Microchip CEO refrained from commenting any questions regarding to SMSC's motivation, or whether there was anyone else was courting SMSC.
Microchip must really like the 8051 - they have bought another 8051 company !
That aside, SMSC has a _very_ different customer profile to Microchip, which is sure to cause significant mindset and culture issues.
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