Cable Guy Alan Breznick, Cable/Video Practice Leader, Light Reading 4/25/2007
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