Israel’s DSP Group (Nasdaq: DSPG) today announced that it had acquired Teleman Multimedia, a California-based maker of video compression and decompression chips, for $5 million in cash.
DSP Group, which focuses on semiconductors for short-range wireless technology, said it acquired Teleman’s intellectual property, including patents and other research and development in process. In addition, it hired Teleman founder, CEO and CTO, John Hong as vice president for video technologies as well as other key Teleman engineers in Korea and California.
DSP Group CFO Moshe Zelnik said he expected new products built around the acquired technologies to begin generating revenues by the third quarter of 2004.
Zelnik noted that while DSP paid $5 million in cash for Teleman’s assets, it also expected additional expenses related to the deal of approximately $200,000.
DSP Group adjusted its future guidance in light of the agreement. “Diluted EPS is expected to reflect a decrease of $0.11 for 2003; $0.07 of which is related to the $2.6 million non recurring charges; and $0.04 of which is related to an increase in overall ongoing operating expenses, representing a slight dilution to our previously anticipated performance,” the company said.
A one-time charge of $2.6 million related to in-process research and development and other expenses will be included in financial statements for the second quarter of 2003. An additional amount of $2.6 million related to the established technology and expenses will be amortized over a period of four years, the company said.
"The acquisition of Teleman's video technologies opens the door to a very interesting array of multimedia applications," said DSP Group chairman and CEO Eli Ayalon. "We believe that the technology acquired from Teleman combined with our leading voice, data and communications technologies will enable us to continue and grow our business in the years to come."
"DSP Group plans to build a new team of 40 designers around the group from Teleman. This team will integrate the Teleman and DSP Group technologies to create new products to meet the developing market demand for video features.”
“The first product integrating the Teleman technology has been defined and has secured one design win. Shipments of this product are expected to begin in the third quarter of 2004. We expect the sales of the company in the fourth quarter of 2004 enriched with the new video products, to show a 30% increase compared to our forecast for the fourth quarter of 2003," Ayalon added.
According to DSP Group, Teleman’s silicon platform supports compression standards such as MPEG4, JPEG and H263, which are used in video conferencing applications. Work is already in progress to support the new compression standard H264, which enables improved video quality at low bit rates, the company says.
DSP Group trades on the Nasdaq Market at a $650 million capitalization. Its shares closed on Friday at $23.67.
Published by Globes [online] - www.globes.co.il - on 19 May, 2003