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Zoran snapped up by hungry CSR – becomes $1 billion class chip player

Zoran suddenly became interesting

By PETER WHITE

Published: 24 February, 2011

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Zoran suddenly became interesting. Actually it’s been quite interesting for a long time, and we tried to drum up some excitement when it acquired Microtune last year, but its small scale has always legislated against it. It seemed destined to pick up low level SoC contracts for smaller equipment suppliers, and was always the chip company that thought it could. Now that it’s been bought by Cambridge Silicon Radio, the UK Bluetooth and GPS giant, it has the potential to rapidly become the little chip company that can.

This is not a merger that we predicted, but that’s mostly because of the broad nature of both companies and their trans-Atlantic cultural differences, but now that the deal is “out there,” is seems a natural. We think it reflects two globalizing trends, it targets the high growth area of “connected” devices, taking it up against suppliers like Broadcom and Texas Instruments, and at the same time acknowledges that this world is polarizing into larger and larger suppliers or clusters of suppliers, and this requires “bigger” chip suppliers.

What it perhaps indicates is that every fabless chip company, whether they are in WiFi, Bluetooth, GPS, video acceleration, graphics cores, audio and video codecs, set top SoCs, “no new wire” TV connectivity like MoCA, or in 60 GHz Wireless or a variety of other disciplines – they all need scale to reach out to the rapidly growing sectors of connected devices, be they Tablets, smartphones, TVs or handheld game consoles.

When these two come together they will broach the $1 billion barrier and are on course for $1.2 billion or more. CSR’s results were a little on the flat side last quarter maintaining a strong gross margin at 48.7% but falling in the quarter on cash generation and profit. For the year CSR finished with revenues of $800.6 million, an operating profit of $79 million and cash generation of $78 million.

In the final quarter it suffered amortization costs for goodwill as well as share option charges, and integration and restructuring charges on buying companies, and of course that big, but pleasantly final settlement it had with Broadcom over GPS technology which took $60 million off the bottom line. The company was so impressed with progress is paid a dividend for the first time.

CSR has made its previous $136 million stock purchase of Sirf Technology Holdings work for it, after buying it for a steal in the recession in February 2009, a move which added GPS to its portfolio. The company is already present in many handsets of the back of that deal, and said when its results came out that the Sirf technology, plus its own CSR8000 low power Bluetooth, for headsets, had both enjoyed significant design wins. It also said that its progress in WiFi was also gratifying which had, on its own pulled in 30 design wins throughout 2010. At Mobile World Congress, CSR was showing off extremely low power Bluetooth, taking signals from a nearby phone to an NEC built watch, for signaling call and message arrival. It also staked a claim for Android low energy Bluetooth for tablets. So far Android has not make a real feature of Bluetooth, but it’s likely that it will.

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