Wind River systems to expand Intel offerings
Intel says it will purchase Wind River Systems for $884 million. Media reports say acquiring the software company will allow Intel to expand beyond the personal computer market.
Intel is a computer chip maker based in Santa Clara, Calif.
Deal details
Though $884 million is a big chunk of change, Intel won’t be needing any cheap loans to buy Wind River Systems. Simple Thoughts reports that the Intel and Wind River Systems are entering into an all-cash deal. According to Simple Thoughts:
Intel said the purchase will benefit its processor and software offerings for embedded systems and mobile devices, which run the gamut from smart phones to networking equipment.
About Wind River Systems
Wind River Systems was founded in Berkeley, Calif., in 1981. Jerry Fiddler and David Wilner first established Wind River Systems. The company is well-known for creating Linux, “source code and a build system that generate runtime images suitable for embedded devices,” according to Wikipedia.
The company has acquired several other companies along the way, starting with Integrated Systems Inc. in 1999. Wind River Systems also partnered with Red Hat in 2004 to to create a new Linux-based distribution for embedded devices.
About Intel
Intel started out as Integrated Electronics Corporation in 1968. It started out making semiconductors and microprocessors, and Intel now makes motherboard chipset, network cards, flash memory, graphic chips, embedded processors, and other devices related to communications and computing.
While consumers struggle in a waning economy, the market for small, inexpensive “netbooks” has expanded.
Intel reaps benefits of netbooks
According to Simple Thoughts:
Though the recession has hurt demand for PCs in general, there has been growing demand for products containing the company’s lower-powered Atom processor, which is used in small electronics like the stripped-down laptops known as netbooks. The acquisition may be a way for Intel to beef up Atom-related offerings.
Intel in 2007 launched a Linux-based operating system, Moblin,” for small electronics that use Atom processors. Some sources say Intel is gearing up to be in a position to compete with computing giant IBM.
Stiff competition
Simple Thoughts reports:
In a client note, FBR Capital Markets & Co. analyst Craig Berger said the deal could be Intel’s first step in diversifying its business model the way computer maker IBM Corp. now sells hardware, chips, software and services.
“If Intel is beginning to diversify its business away from just semiconductors, we would expect a host of similar software or services related acquisitions in coming years,” said Berger, who rates Intel shares “Market Perform.”
Stock performance
Intel’s acquisition of Wind River Systems has been helpful for both companies in the stock market.
Wind River shares skyrocketed after the announcement, jumping $3.50, or 44 percent, to $11.50 in midday trading. Intel shares rose 14 cents to $16.08.
Deal will close soon
Intel said it agreed to acquire all outstanding Wind River common shares for $11.50 each, a premium of 44 percent over Wind River’s Wednesday closing price of $8. The deal is expected to close this summer.
Wind River Systems technology is currently used by such large entities as NASA, Apple Inc. and Hewlett-Packard Co.
Alameda, Calif.-based Wind River’s software helps companies develop and test software for devices like rear-seat entertainment systems in cars and avionics in defense aircraft.
Wind River Sytems currently has 1,600 employees.
Discussion of Wind River Systems Software Maker Sold to Intel