Mergers & acquisitions

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

Pancakes 12/5/2012 | 3:09:34 PM
re: Bye-Bye, Terayon
"we finally won't have Terayon to kick around anymore."

Oh, quite wrong. This company is going to get kicked quite hard soon by hurt investors. Feel free to join in on the kicking.

Michael Harris 12/5/2012 | 3:09:23 PM
re: Bye-Bye, Terayon Another shareholder lawsuit? So, you think Terayon could have fetched more than it did in this deal? Their most recently reported quarterly numbers were less than stellar. Also, it is not beyond the realm of possibility that TerayonGÇÖs largest MSO customers, skittish about the companyGÇÖs stability, said get acquired, or weGÇÖre sending our business elsewhere. Not exactly optimal circumstances in such a scenario.
Pancakes 12/5/2012 | 3:09:18 PM
re: Bye-Bye, Terayon Yes, I think Terayon could have done far better by simply by not selling, and instead continued to improve CherryPicker software. The value of being able to deliver localized ad content alone far exceeds $140M. There are tons and tons of revenue possibilities for ad localization which no one has dicussed yet. And Terayon just gave all of that away to Motorola.

yes, current revenues were not "stellar". But they did say that Q2 or Q3 things would turn around. So what future value? Maybe profitable? Maybe pps gets back up to $3.50?

At the end the execs made out like bandits, while the shareholders got screwed. Remember at around $3.50pps THEY announced the "self-initiated" audit/restatement. PPS drops over a years time. Then they sell the company for a low $1.80pps. That's worthy of a SEC investigation in my mind.

And then Jerry Chase has the nerve to say afterwards "$1.80 is shareholder value".

On a lighter note, it seems funny now that Zaki Rakib went and purchased a Bomb Shelter for his home. Did he know he would be pissing of shareholders?

(Thanks for letting me vent and not deleting my post. It's important that you allow honest feedback on your site).
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