Microsoft to Acquire 3-D Chip Firm Canesta

Updated with detail from Microsoft statement

NEW YORK (TheStreet) -- Microsoft (MSFT) has agreed to acquire Canesta Inc., a private Sunnyvale, Calif.-based developer of electronic perception technology.

Canesta has announced the deal in a statement on its Web site, and Microsoft later confirmed it in an email to TheStreet

"Microsoft has long pursued a vision of natural user interface," the statement reads. "Canesta has developed some interesting technology for sensing gestures that complements advances already underway at Microsoft."

A New York Times report on the deal said that Microsoft has used a Canesta rival's technology in its Kinect add-on for X-Box consoles, and part of Microsoft's emailed statement went on the offensive to head off any conclusion-jumping about why it was making the deal.

"We have a long history of investing in this technology, and this acquisition is just part of that long-term strategy, not for any specific product in the future," the statement reads.

Financial terms of the deal, which Canesta said is expected to close by the end of the year, weren't disclosed.

Shares of Microsoft closed Friday up 1.5% at $$26.67 after the Dow component reported better than expected earnings for its fiscal first quarter after Thursday's closing bell. Year-to-date, the stock is still down almost 14%, although it's made a strong move above its 50-day moving average of $24.93 of late, rising in 15 of the last 19 sessions dating back to Oct. 4.

"There is little question that within the next decade we will see natural user interfaces become common for input across all devices," said Jim Spare, the president and CEO of Canesta, in a statement. "With Microsoft's breadth of scope from enterprise to consumer products, market presence, and commitment to NUI, we are confident that our technology will see wide adoption across many applications that embody the full potential of the technology."

Canesta has developed 3-D sensing semiconductor technology in its Canestavision chips and has been granted 44 patents to date, according to its Web site.

--Written by Michael Baron in New York.

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