Stop me if you've heard this one before: Trident Microsystems just announced a "stalking horse bidder" to kick-start the bankruptcy auction of some of its assets.
The chip designer filed for Chapter 11 protection in January and immediately got a stalking horse bid from rival Entropic Communications (Nasdaq: ENTR). That auction closed in February, and Entropic walked away a winner. No competing bids were ever disclosed, but Entropic had to cough up another $10 million before the bankruptcy would sign off on a $65 million deal. That's the end of Trident's set-top box product lines, safely in the hands of a rival.
But Trident did more than just set-top solutions. Now the time has come to find a buyer for the digital television line of chips, and Sigma Designs (Nasdaq: SIGM) has stepped up to the plate.
This stalking horse bid starts at $21 million, plus the assumption of some unspecified liabilities. Sigma doesn't play in that particular market segment today, so this deal would broaden the company's reach.
Again, this could be the start of a small-scale bidding war. Likely bidders would include Entropic again, as the company has enough cash to make a serious bid. Broadcom may or may not have kicked the tires of Trident's set-top box division, but it certainly has the assets to make a play here if it wants to.
Or perhaps the remains of Trident simply fall apart. Sigma's opening bid notes several times that the value of Trident's DTV assets may not be stable, and Sigma would be able to back out of the auction if things turn ugly.
Digital TV may seem like a sure bet in this day and age, and a certain company you may have heard of is expected to make a big splash with a reimagined TV product later this year. But tech giants have tried and failed to conquer the living room before, and Trident's untimely demise underscores the huge challenges in this market. Why not make a safer bet instead? Have a look at nine rock-solid dividend stocks that can secure your retirement. This special report is free for a limited time, so get your copy right now.
