Thursday, June 4, 2009

Intel to Buy Wind River System to Extend Chip Market

The Intel Corporation said Thursday that it had agreed to buy Wind River Systems, a software company, for about $884 million in a bid to put its chips into more consumer electronics and wireless devices.

Intel said it had agreed to pay $11.50 a share for Wind River, a 44% premium over its closing price on Wednesday.

Wind River makes operating systems for platforms as diverse as autos and mobile phones, serving customers like Sony and Boeing.

Intel, whose processors run about 80% of the world’s personal computers, is expanding into new markets, including chips for televisions and mobile devices. Wind River’s software and customer list will pave the way for Intel to win more chip contracts, said Cody Acree, an analyst at Stifel Nicolaus & Company in Dallas.

“If you have a chip you want to put in a lot of things other than a PC, you need code,” Mr. Acree said. “Wind River brings that, and it brings customers.”

Shares of Wind River, which is based in Alameda, Calif., rose $3.76, or 47 percent, to $11.76 a share. Shares of Intel, based in Santa Clara, Calif., rose 19 cents, to $16.13 a share.

It is Intel's first major acquisition since Paul S. Otellini took over as chief executive in 2005.

Intel expects chips for so-called embedded systems, like the electronics in car navigation systems, to generate billions of dollars in annual sales, said Bill Kircos, a company spokesman. Intel already supplies chips to BMW for car stereos that use Wind River software.

"It's trying to get our chips into new systems in your car, into new meters that let you monitor how you use electricity," Mr. Kircos said. "It's about getting into new consumer electronics, smartphones and health care."

source: http://www.nytimes.com/2009/06/05/technology/companies/05chip.html

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