recently announced that it will acquire
BCD Semiconductor Manufacturing Limited
), an analog chip maker, for $151 million or $8 per ADR (American
BCD SEMICON-ADR (BCDS): Free Stock Analysis
DIODES INC (DIOD): Free Stock Analysis Report
FAIRCHILD SEMI (FCS): Free Stock Analysis
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The decision to acquire BCDS is perceived as the company's
strategy to expand its power management products range and
strengthen its position in Asia. On the flipside, net income of
Diodes has declined more than 50% in the first nine months of
2012. Consequently, the acquisition is likely to reduce its
liquidity in the short-term and will continue to drag down its
earnings until it is completely integrated with the company.
BCD Semiconductor possesses an existing line-up of solid standard
Linear and Power Management products and AC to DC solutions for
Switch-Mode Power Supply charger and adaptor. The company has an
extensive development team in China with a very strong local
market position coupled with a cost effective wafer fab
capability and capacity.
The acquisition is likely to provide synergistic benefits to
Diodes by expanding its footprint in the broader Analog market
and extend its product offerings. The recent acquisition is
in line with Diode's strategy for inorganic growth. At the same
time, the merger will be beneficial for both the companies as it
provides operational synergies with an expanded customer base and
cost saving opportunities.
Diodes designs, manufactures, and supplies application specific
standard products in the discrete, logic, and analog
semiconductor markets primarily in Asia, North America, and
Europe. The company primarily serves the consumer electronics,
computing, communications, industrial, and automotive markets.
Diodes currently has a Zacks #4 Rank, which translates into a
short-term Sell rating. We have a long-term Neutral
recommendation on the stock. One of its competitors,
Fairchild Semiconductor International Inc
) carries a Zacks #3 Rank, which translates into a short-term