Sigma Designs liquidating after failed merger
Company says it will eliminate roughly 300 jobs after a failed merger with Silicon Labs
FREMONT >> Sigma Designs will slash nearly 300 jobs and pursue a liquidation plan after it failed to meet conditions for its proposed merger with Silicon Labs, the maker of specialty semiconductors said Tuesday.
The company said it would sell its Z-Wave business to Texasbased Silicon Laboratories for $240 million. After that, Sigma Designs would craft the liquidation plan.
Approximately 295 Sigma employees in the company’s smart television and set-top box division will be laid off, Sigma said.
“Sigma Designs intends to work with its advisers to confirm its plan of liquidation,” Sigma stated in a prepared release. “The board of directors expects, subject to uncertainties inherent in the winding up of its business, to make an initial distribution following the Z-Wave asset sale and initiation of the plan of liquidation.”
A final distribution of proceeds from liquidating the company would occur after Sigma Designs pays outstanding claims.
Over the 12 months that ended in October, Fremont-based Sigma lost $55.3 million on revenue of $155.7 million.
“Sigma Designs has built a strong Z-Wave business and established itself as a leader in the home-automation market,” Thinh Tran, chief executive officer of Sigma Designs, said in a prepared release.
But that wasn’t enough, apparently, for Sigma to make a go of it against big rivals.
“It became increasingly apparent that the significant investment needed to maintain our strong position would have been challenging against much larger competitors in a consolidating semiconductor industry,” Tran said.
Some of those foes certainly seemed formidable.
“Broadcom has solutions for set-top boxes and smart TVs, and that’s a pretty big competitor,” said Ben Bajarin, a principal analyst with Creative Strategies, a tech market researcher.
Bajarin also believes that the sale of Sigma’s Z-Wave business to Silicon Labs makes sense.
Sigma expects the ZWave business sale should occur by no later than the middle of this year.
“Sigma just couldn’t compete against the big players, so they needed somebody to acquire them,” Bajarin said. “Sigma must have just seen that there wasn’t a light at the end of the tunnel.”
Fremont-based Sigma said it has begun to scout for more asset sales as it winds down its business.
“Sigma Designs is exploring alternatives to increase the available cash for distribution to shareholders through divestment of additional businesses, including its home connectivity business, its Mobile Internet of Things business, remaining assets of its Smart TV and Set-top Box businesses and other assets,” Sigma said.