MILPITAS, Calif., Aug. 21, 2007 -- Chip maker LSI Corp. announced yesterday that it will sell its mobility products business to Infineon Technologies AG of Neubiberg, Germany, for $450 million in cash, plus a performance-based payment of up to $50 million.
LSI said in a statement the sale is the result of a "strategic review" of its business portfolio following its April 2 $4 billion merger with Pennsylvania-based Agere Systems. The mobility unit had been part of Agere prior to the merger. LSI said the sale will help the company avoid making significant financial investments in the cell phone market and instead concentrate on growing its storage and networking semiconductor businesses. The company said it expects to eliminate $25 million per quarter in operating expenses after the sale.
"The sale of our mobility business will allow us to further focus our efforts on attractive market opportunities in storage and networking, where we have a strong presence, significant differentiation and the scale needed to be successful over the long term," said Abhi Talwalkar, LSI president and CEO.
Under terms of the agreement, Infineon will buy the LSI Mobility Products Group (MPG), which designs semiconductors and software for cell phone handsets and chips for satellite digital audio radio applications, for $450 million. If the group meets certain performance goals, Infineon will pay another $50 million in the first quarter of 2009. MPG generated revenues of $186 million in the first half of 2007, with $91 million in the second quarter. LSI said it expects the group's revenues to grow sequentially in the third quarter.
Upon closing, approximately 700 LSI employees will join the Infineon Communications Solutions business group, which makes semiconductor products for cellular, wireless and wired communications. Infineon will also sign intellectual property, transition services and supply agreements with LSI.
The transaction, subject to closing conditions and regulatory approval, is expected to close in the fourth quarter.
LSI also announced today that its board of directors has authorized a new stock repurchase program of up to $500 million, to be funded in part by proceeds from the MPG sale, which will also potentially finance future acquisitions in the storage and networking markets, the company said.
For more information, visit: www.lsilogic.com
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