Market gossip is that ALTR recently refused a friendly offer from INTC at $53 a share.
Speculation resurfaced yesterday with rumors that talks have started up again.
The catalyst seems to be the fact that serial acquirer Avago (AVGO–I own shares) appears to be considering a bid for ALTR’s rival Xilinx (XLNX).
AVGO seems to have a knack for finding firms that have excellent technology but which, for one reason or another, find it difficult to achieve consistent profit growth. AVGo buys them, reorganizes them and puts the profit machine into high gear.
In this case, the sub-industry involved is the sleepy world of field programmable gate arrays (FPGAs), dominated by the cozy duopoly of ALTR and little brother XLNX. AS the name suggests, FPGAs are chips whose program structure is not hard-wired (those are application-specific integrated circuits–ASICs). So they can be reprogrammed, upgraded, debugged…even after they’ve been put into machines that are now in use. This allows manufacturers to get, say, cutting-edge telecom equipment into customers’ hands very quickly. The drawback is cost.
The AVGO move suggests the FPGA arena is about to become considerably more competitive. AVGO/XLNX would be four times the size of ALTR, implying easier access to capital and the ability to offer a much wider variety of products to customers than ALTR. This suggests ALTR realizes the status won’t be quo for much longer and it needs to be part of a bigger entity in order to compete.
To my mind, the big winner in all this would be INTC.