Nvidia Bulks Up
Nvidia (NVDA) finally announced an acquisition on Monday, but it wasn't the deal the Street was expecting.
Though the rumor mill had been abuzz for weeks that Nvidia would get swallowed by chip giant Intel (INTC), it turned out that Nvidia was the one looking to bulk up. The Santa Clara, Calif., graphics chipmaker plunked down $357 million to acquire PortalPlayer (PLAY).
Nvidia CEO Jen-Hsun Huang described the deal as bringing together the two key ingredients of next-generation electronic devices: the application processor and the graphics chip.
"With the products created through this combination, we intend to drive the next digital revolution, where the mobile device becomes our most personal computer," said Huang.The combination was in many ways one of necessity for the two chipmakers, which have found themselves under increasingly challenging circumstances. Nvidia has been taking steps to diversify itself away from a maturing PC industry, by expanding into consumer electronics such as cell phones and game consoles. The pressure has been particularly acute since Nvidia's graphics rival ATI Technologies joined forces with Advanced Micro Devices (AMD) last month. For its part, San Jose, Calif.-based PortalPlayer has been desperate for any kind of a succor after the company lost its business providing chips for Apple Computer's (AAPL) popular iPod nano in April. Despite PortalPlayer's setbacks, investors bid the stock down in afternoon trading Monday, owing to the meager premium that Nvidia ponied up. PortalPlayer shares were recently off 7 cents to $13.29.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV