Last week,
Microchip Technology Inc.
(
MCHP
) announced its decision to acquire Bluetooth and Wi-Fi modules and
solutions provider, Roving Networks. Purchase price and other
details have been rendered confidential by the company; however,
Microchip declared that earnings of Roving Networks shall appear
immediately in its accounts on a non-GAAP basis.
As per this contract, Roving Networks shall be allowed to
continue its operations from Los Gatos, California. Furthermore,
the company will continue its dealings with customers in the same
fashion as before without any interference from its parent
company.
Management expressed its alacrity on the venture by averring
that the burgeoning demands of Wi-FI and Bluetooth connectivity is
the primary reason for the acquisition which is expected to largely
proliferate its embedded applications market. Mike Conrad, CEO,
Roving Networks, also added a panegyric to the venture by stating
that Microchip's wide channel presence and client base would be key
growth drivers for Roving Networks in the days forthcoming.
The company has retained a proactive stance when it comes to
making strategic and profitable acquisitions. In 2010, Microchip
acquired Silicon Storage Technology (
SST
) to enhance its embedded flash technology market. It is quite
laudatory that even under a clouded fiscal scenario; the company
displays copious enthusiasm about making acquisitions for market
expansion and technological advancements.
However, similar trends can be seen when the industry Microchip
pertains to is looked at from a vantage point. Almost a month ago,
RDA Microelectronics, Inc.
(
RDA
) acquired Coolsand Holdings Co., Ltd. for a total price of $46
million. Microchip should be quite wary of such moves made by its
ominous competitors in the industry.
The company currently retains a Zacks #3 Rank, which translates
into a short-term 'Hold' rating. We also maintain a long-term
'Neutral' recommendation on the stock.
MICROCHIP TECH (
MCHP
): Free Stock Analysis Report
RDA MICROEL-ADR (
RDA
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