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Merger means more opportunities

When is an acquisition not an acquisition? When it's a merger. Despite CSR paying close to $680million in stock for multimedia chip developer Zoran and maintaining the chairman, chief executive and chief financial officer positions, the deal is, officially, a merger. CSR says the deal has to potential to double its revenues in the next few years.

All well and good, but the interesting question is why has the deal been done? Talk to CSR and the official line is that it will allow its customers to develop differentiated products. Jeffery Torrance, CSR's vp of partnerships and corporate developments, said the world, as CSR sees it, is divided into screens in four markets – pcs, tvs, cars and phones. He says companies which supply to these markets are interested in multimedia and connectivity. "By getting a good imaging and video company and blending this with our connectivity expertise, we will be able to supply differentiated components where it matters."
CSR had started to take steps down this road a while ago, when it acquired gps based location technology specialist SiRF. But the Zoran deal moves that on. One immediate market opportunity is in digital still cameras, where Zoran is the leading chip supplier. Layering on CSR's gps technology will allow cameras to know where they are – so called geotagging. Its connectivity technology will allow images to be uploaded to the web. Beyond that comes location aware services, using mobile phones, for example, to supply data about where you are automatically. "Nobody has this in the way we have," Torrance claimed. Maybe not, but there surely will be competition in the near future.
There are obvious technology and market benefits in the merger, but is it possible, however, that CSR has done this deal as a means of protecting itself? There has been speculation about CSR's future in the recent past – it has been seen as a takeover target – and the acquisition of Atheros by Qualcomm got the London Stock Exchange, amongst others, in a flutter. There's nothing like making yourself too big to swallow.
Spare a thought, however, for the founders of failed start up Air Semiconductor. Its Airwave-1 chip had two main applications: providing geotagging services to digital still cameras; and location awareness for mobile phones. Sound familiar?

Graham Pitcher

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