Tessera Buys Digital Optics

Tessera Technologies Inc., a provider of miniaturization technologies for the electronics industry, announced today it will purchase Digital Optics Corp., a designer of micro-optical solutions based in Charlotte, N.C., for $59.5 million in cash.

The transaction is subject to customary closing conditions, and is expected to close in the third quarter of 2006. "This acquisition provides an additional path to significant future growth for Tessera," said Bruce McWilliams, Tessera's chairman and CEO. He said he believes Tessera can now develop a consumer optics IP business -- for applications such as camera phones -- on a similar scale to its semiconductor packaging business by the end of the decade. The company said it also expects to expand its miniaturization techniques into applications such as next-generation high-definition DVD players, gaming machines and drives.

Digital Optics was founded in 1994 by a team of micro-optics experts, Tessera said. It currently has 83 employees, including 11 PhDs. Its 100,000-sq-ft design, development and prototyping facility will become Tessera's Micro-Optics Center of Excellence, Tessera said, for the making of microscopic structures to shape and influence light.

Digital Optics' technologies are used in applications including semiconductor equipment optics, communications and photonics. In 2005, the company generated revenue primarily by providing specialty lenses and optical subassemblies for the semiconductor lithography and communications markets, as well as by funded research and development for various consumer and government applications. The company has 130 issued and pending patents in the areas of micro-optics and optical integration, Tessera said.

"Once the acquisition is completed, Digital Optics will become a wholly-owned subsidiary of Tessera," said Mike Forman, Tessera's interim CFO. "Going forward, the Digital Optics business will be structured similarly to Tessera with revenue derived from licensing, royalties and services. In 2006, we expect Digital Optics to contribute services revenue ranging from $7 million to $8 million, and the earnings impact is expected to be nonmaterial."

For more information, visit: www.tessera.com