PM-Sierra will pay the initial $213 million in cash, but has promised to pay an additional $60 million if Winetegra can match certain financial goals by the end of 2011.
While Wintegra is headquartered in Austin, a majority of its employees work at its Tel Aviv, Israel manufacturing plant. The 23 Austin employees handle sales, marketing, and some software development. Wintegra is a leading provider of chips used in broadband communications and data storage. These chips are what are used in devices such as smart phones and GPSs.
The company was founded by a group of former Motorola employees and managers. While the company saw a recession-based dip in revenue in 2009, the company was on the rise in 2010, even filing for an initial public offering (IPO) in May. As The Austin American-Statesman reports:
The 10-year-old company said it made a profit of $2.6 million on revenue of $26.3 million for the first six months of 2010. That compared with a loss of $1.4 million on sales of $13 million for the same period in 2009.
PMC- Sierra recently saw its third-quarter profit drop 46% drop this year, something they hope acquiring Wintegra will help correct. As The Wall Street Journal reports:
The shares turned around--and were up 0.6% to $7.05 in recent after-hours trading--after the company said in a conference call that it has agreed to pay a net $213 million in cash for privately held Wintegra Inc., which specializes in making chips for mobile backhaul equipment.