Every dark cloud has a silver lining. The bankruptcy thunderhead hanging over Trident Microsystems
After years of spotty sales and heavy losses, Trident appears close to calling it a day. The maker of media processors for set-top boxes and modern TV sets is filing for Chapter 11 reorganization in the U.S. and Cayman Islands, setting the stage for a quick bidding war.
Entropic kicks off the bidding as the appointed "stalking horse" bidder. For $55 million in cash, Entropic hopes to gain Trident's set-top product lines and a hefty chunk of technology patents. The Trident assets are supposed to report positive earnings for Entropic within a year.
It's not a slam-dunk win, though. Broadcom
Stalking horse bidders don't always win these bankruptcy auctions. In this particular case, though, Entropic looks like a terrific fit for Trident's assets. The two companies ship very complementary products, often side-by-side in the same home entertainment systems. It's a logical expansion of existing businesses.
Moreover, Entropic is profitable and debt-free, which should make it look like a stable bidder when the bankruptcy judge bangs the gavel. STMicro could pose a challenge if it really wants a slice of American market pie; Broadcom's already huge footprint makes it a far less likely winner.
Trident shares may end up totally worthless. If you're looking for a stock in the space that Foolish analysts love, take a peek at a few semiconductor stocks with tremendous prospects in 2012 before it's too late.
Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.