Intel Tries the Comms Market, Again
The deal, announced today and expected to close during the summer, has Intel offering $11.50 per share for Wind River.
In midday trading, Wind River shares were up $3.51 (44%) at $11.51, possibly signifying that some investors expect higher bids to come in.
Intel investors were more nonchalant; that stock was up 4 cents (0.3%) at $15.98.
Wind River provides operating systems and other software for embedded systems -- a catch-all category comprising pretty much anything that has a computer in it but isn't a PC or server. Examples include cash registers, aerospace gear, medical equipment -- or switches, routers, base stations, and mobile handsets.
For all its microprocessor muscle, Intel isn't a powerhouse in embedded processors. The mobile handset market, in particular, has gone to the likes of ARM Ltd. , Qualcomm Inc. (Nasdaq: QCOM), and Texas Instruments Inc. (NYSE: TXN).
At the high-end, embedded processing has been the purview of Cavium Inc. (Nasdaq: CAVM), Freescale Semiconductor Inc. , and RMI Corp. , which is being acquired by NetLogic Microsystems Inc. (Nasdaq: NETL). (See Cavium Sprouts More Cores, RMI, Cavium Compare at the Core , and NetLogic Joins Processor Race.)
"Intel just doesn't have a very good track record with anything beyond the x86 market," the PC-processor franchise that included the Pentium, says Will Strauss, principal analyst with Forward Concepts Co. "I think they really feel they have to go beyond x86 for the next decade."
While the Wind River deal could target a wide scope of applications, it's the communications and mobility possibilities that stand out.
"With the emergence of netbooks and smartphones and so-called smartbooks -- mobile Internet devices, as Intel would call them -- the world wants to go portable, and the world wants communications," Strauss says.
But the last time Intel saw that trend, it led to disaster. "In communications, they just died," Strauss says, referring to what he counts as $10 billion in failed Intel acquisitions between 1999 and 2005. Still, Intel recognizes the need for mobility. It's put lots of money into supporting WiMax. It's introduced the Atom line of processors for mobile devices and is encouraging other companies to build systems-on-chips (SoCs) around Atoms. (See Little Laptops Could Drive Big Data Usage.)
Wind River offers software, including a Linux kernel, that could run on Atoms. Wind River also provides software that runs on digital signal processors from companies including Texas Instruments, which is another way the acquisition would give Intel more presence in the cellphone market.
— Craig Matsumoto, West Coast Editor, Light Reading