Sirf Tech Digs Its Own Grave
SAN FRANCISCO -- Investors had two reasons to stick with Sirf Technology (SIRF) as the chipmaker floundered: a takeover or a turnaround.
Both of those hopes evaporated with last week's legal ruling against Sirf.
The preliminary finding by a U.S. International Trade Commission judge that Sirf is infringing on six of Broadcom's (BRCM) patents represents more than the latest in a string of bad news for Sirf -- it marks the end of any reason to care about a company that once seemed poised to be a central player in a new world of iPhone-like gadgets.
Shares of Sirf plunged 24% to $2.44 Monday as news of the ITC ruling spread.Sirf developed -- and once ruled -- the market for GPS chips that communicate with overhead satellites to provide an electronic device with its precise geographic location. But a rush of competitors has eroded the price of Sirf's GPS chips and its market share. According to iSuppli, an industry research firm, Sirf had more than a 90% share of the market for GPS chips in cell phones in 2006. In the first quarter of 2008, Sirf's share had dwindled to 36%, while Texas Instruments (TXN) had grabbed 35% and Infineon (IFX) had 21%. In the market for portable navigation devices -- a larger market for Sirf than cell phones -- competition has also been fierce with chipmakers Broadcom and ST Microelectronics (STM)stealing significant share from Sirf at customers like Garmin (GRMN) and TomTom, according to RBC Capital Markets analyst Mahesh Sanganeria.
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