By Dow Jones Business News,
January 21, 2014, 09:50:00 AM EDT
By Yun-Hee Kim
HONG KONG-- Intel Corp. agreed to sell its business unit focused on the development of online TV products and
services to Verizon Communications Inc. for an undisclosed sum.
Verizon will buy the intellectual property rights of Intel's cloud TV platform and will offer jobs to about 350
employees working for the Intel Media division based in Santa Clara, Calif., the companies said in a joint statement
Tuesday. Though terms weren't disclosed, media reports previously said Intel was seeking around $500 million.
The deal is expected to close in the first quarter of 2014 and will require regulatory approvals.
"This sale enables Intel to further align our focus and resources around advancing our broad computing product
portfolio," Intel Chief Executive Brian Krzanich said.
For the past couple of years, Intel has been planning a service that would stream TV channels over the Internet,
and its set-top box was widely praised by media executives as significantly easier to use than those offered by
traditional cable operators.
But securing access to TV channels proved to be a challenge. Some TV programmers would offer their content only if
several peers of similar size jumped in, media executives had said. Price also has been a barrier as programmers
insisted on a premium, so as not to disadvantage the cable and satellite companies that are their biggest customers.
Intel instead has been placing increasing focus on building its data-center business as well as the "Internet of
Things," a concept that refers to a network of smart devices that communicate with one another with little human
intervention. The world's biggest chip maker by revenue also has been placing more emphasis on software and services to
The sale comes after Intel said last week that it planned to cut its workforce by 5% and forecast flat revenue for
the current fiscal year.
Intel, known for supplying chips that serve as calculating engines in personal computers, has suffered as more
consumer dollars flow to tablets and smartphones from PCs. Researchers Gartner Inc. and IDC both have recently projected
that PC sales fell 10% globally last year, the worst showing for the industry on record.
For Verizon, the deal will help accelerate the availability of next-generation video services at a time when its
revenue from traditional fixed-line services is waning.
"We will have the opportunity to enhance, expand, accelerate and integrate our delivery of video products and
services to better serve audiences on a wide array of devices," Verizon Chief Executive Lowell McAdam said.
The deal comes on the heels of Verizon's announcement last month to buy Web startup EdgeCast Networks for an
undisclosed sum, continuing a string of acquisitions aimed at expanding the carrier's foothold in Internet technologies.
Separately Tuesday, Verizon reported a fourth-quarter profit as the company continued to benefit from rising
wireless and FiOS customers.
Write to Yun-Hee Kim at email@example.com
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