A year ago, the debate around Dialog Semiconductor (OTCPK:DLGNF) was whether or not there was any substance to bearish rumors and predictions that Apple (AAPL)
was working on its own power management integrated circuits (or PMICs)
and would use them to replace Dialog’s chips in its iPhones and other
products. With Apple having since done exactly that (although not
completely), now the debate is how far the substitutions will go and
what Dialog can do to preserve and rebuild its business absent
contributions from Apple that have historically made up 70% or more of
revenue (and high-margin revenue at that).
Both Dialog and Synaptics (SYNA)
have confirmed that they’re discussing a merger; while Synaptics has
been a frequent-flier on sell-side “likely to be bought” charts, and
there would be potential synergies in such a deal, Dialog’s iffy history
in M&A doesn’t lend a lot of confidence. The good news, such as it
is, though, is that the market is already pricing in a very dire outlook
for this beaten-up chip company.
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Dialog Semiconductor On The Clock
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