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.Read the Full Research Report on MCHP
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