I've been bullish on shares of Entropic Communications (NASDAQ:ENTR) as a turnaround play for quite some time. The company, which develops system-on-a-chip solutions for the "connected home," has been in a multi-quarter funk that it just can't seem to shake off. 

Management has continued to expect that its business is on the cusp of inflection, particularly as new products, as part of their associated design wins, ramp into volume. However, this inflection point has taken longer than expected, which led the company to significantly cut its operating expenses to make getting to breakeven or better much more manageable.

However, on Sept. 16, Entropic announced, in conjunction with a lowering of guidance for the current quarter, that it would be "exploring strategic alternatives." 

In other words, Entropic is now up for sale. 

What's going on here?
Entropic's shares have been beaten down pretty significantly since late 2013, particularly as the business has been struggling for several quarters now. The timing of Entropic's "strategic alternatives" announcement -- that is, in conjunction with yet-another significant quarterly warning -- is probably no coinicidence; the shares probably would have been crushed (further) had Entropic not given investors hope of a buyout. 

Now, interestingly enough, there has been plenty of consolidation in the semiconductor space over the past year or so, so it wouldn't really be unusual to see Entropic get picked up by one of its larger competitors, like Broadcom.

However, there's one thing that investors should keep in mind before jumping in on the hopes of a buyout at a premium to today's prices. 

Was anybody interested before?
My guess is that Entropic's struggles are pretty well known to any potential acquirers. Further, given how low the stock is relative to historical levels, it would only make sense that such potential acquirers might have, had there been a burning desire to actually buy the company, made a move before this point. 

Now, that's not to say that Entropic won't be successful in finding a buyer; Mindspeed, which put itself "up for sale" back in April 2013, got taken out by M/A-COM (NASDAQ: MTSI) in November of that year for a hefty premium over where it traded when its search for "strategic alternatives" was announced. 

In addition, such "strategic alternatives" searches aren't always successful, as investors and speculators in Rackspace Holdings found out -- coincidentally on the same day that Entropic investors got their own news.

There might be some money to be made here, but be careful
Here at The Motley Fool, we like to buy great businesses to hold for the long term. Buying shares of a struggling business in the hopes that a larger, more successful company will pick it up isn't all that Foolish (with a capital "F"). 

From a more fundamental standpoint, while management is bullish on its new products as well as the designs those products will go into, it claimed in the press release that "delays in service provider product launches" and "shifts in service provider deployment architectures" are negatively affecting the company's business results. 

If the business really does turn a corner during 2015, as management has indicated that it expects to happen, then the best "strategic alternative" may be to simply ride it out.

But if the competitive environment turns out to be too fierce, or if the company's products aren't as competitive as indicated, then selling the company as soon as possible -- particularly while the business still has significant net cash on the balance sheet -- might be the best option. 

What option(s) Entropic really has, though, will probably be revealed over the next six months or so, either with a buyout or an "end to the review of strategic alternatives." 

One of those outcomes could mean nice upside from here for investors; the other could have the shares testing new multi-year lows.

Ashraf Eassa owns shares of Entropic Communications. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.