Intel Buys Wind River, Targeting Embedded Device Market
Intel, which has sought to revive its processor sales by expanding into the mobile-device market, agreed to buy Wind River, which makes embedded software for such devices, for $884 million in cash. No major regulatory and financial issues are expected, though there could be counterbids, companies and analysts said in interviews Thursday.
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The purchase offers Intel a multibillion dollar growth opportunity to get its chips inside more devices, a spokesman said. It’s part of Intel’s strategy to expand its processor and software business from PCs and servers to embedded systems and mobile handheld devices like smartphones, health IT products and Internet-enabled devices, he said. Wind River’s software and customer list could pave the way for Intel to win contracts, he said. No regulatory and financial issues are expected, he said. The deal, predicted to close this summer, has been approved by Wind River’s board. Wind River will report to Intel’s Software and Services Group after the acquisition closes.
The deal could be Intel’s first step in diversifying its business away from semiconductors, said FBR Capital Markets analyst Craig Berger. With Wind River, Intel will have customers in the aerospace, industrial, networking equipment and consumer electronics, said Stifel Nicolaus analyst Cody Acree.
IBM management may consider a counterbid, if it thinks DoJ would allow the purchase, to protect its PowerPC franchise, said Cross Research’s Richard Williams, saying “IBM provides most of the chips that Wind River software runs on with its PowerPC line.” Broadpoint Amtech analyst Doug Freedman said “we wouldn’t be surprised if large-cap hardware equipment and software providers consider a counter-offer.”
The deal may set off a string of acquisitions, Acree said. “If you have a chip you want to put in a lot of things other than a PC, you need code,” he said.