Moto swung a deal earlier this week to snap up Terayon for the somewhat underwhelming price of $140 million

Alan Breznick, Cable/Video Practice Leader, Light Reading

April 25, 2007

1 Min Read
Bye-Bye, Terayon

So much for that much ballyhooed bidding war for Terayon Communication Systems Inc. , eh?

In what ended up seeming more like a race to the bottom, Motorola Inc. (NYSE: MOT) swung a deal earlier this week to snap up Terayon for the somewhat underwhelming price of $140 million, or just $1.80 per share. That's far less than the estimated $225 million to $275 million price that Motorola, Cisco Systems Inc. (Nasdaq: CSCO), and Harmonic Inc. (Nasdaq: HLIT) were supposedly bandying about for the digital video tech specialist as recently as December. (See Motorola to Buy Terayon for $140M.)

So what the heck happened? Well, let's look at several possible factors, any one of which could have deflated the sales price dramatically over the past four months.

For one thing, Terayon recently reported lackluster earnings results for the fourth quarter and offered lower-than-expected revenue estimates for the first half of 2007, disappointing analysts and invstors. For another, the company's legal, consulting, and accounting costs are still running unusually high, thanks to several pesky lawsuits and continuing financial restatements. (See Terayon Sees Winter Slump .) In addition, Cisco and Harmonic may have simply decided that they just didn't need Terayon all that badly, leaving Motorola with a clear field.

Or maybe all of the above. It's hard to say for sure.

Whatever. What is clear is that, after a long, drawn-out process, we finally won't have Terayon to kick around anymore. So the inevitable marketplace M&A buzz will have to shift to some fresh candidates. Do I hear a bid for Arris Group Inc. (Nasdaq: ARRS) or Harmonic Inc. (Nasdaq: HLIT) or Concurrent Computer Corp. (Nasdaq: CCUR) or RGB Networks Inc. , anyone?

— Alan Breznick, Senior Analyst, Heavy Reading

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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