SiRFs Year Long Wipeout Finally Ends

February 10, 2009 · Posted in Commentary, Companies · View Comments 

Well the end of the long SiRF saga arrived today. Almost a year ago Sirf stock went off a cliff, and continued rapidly downhill over the past 12 months. First it was the dismal business of an important customer in Motorola, then the enormous amount of competition resulting in lower and lower margins, and most recently some unfavorable news regarding its patent litigation with Broadcom, and of course the general economic meltdown.

Today the company announced that it was “merging” with CSR, a UK company which specializes in developing Bluetooth chips, with more minor initiatives in GPS and wifi. Sirf was purchased in an all stock transaction valued at $136 million. Sirf had cash and cash equivalents of $115 million as of the end of year 2008, so not much value placed on the remaining assets there.

As a company with an amazing 80%+ market share just a few years ago, I thought for sure SiRF had a better and brighter future in front of themselves with a strong balance sheet and location awareness becoming more and more mainstream, going into phones, cameras, cars and everything else.

But in fact SiRFs downfall seems to have been caused directly by the popularity of all things location aware… chip manufactures of all shapes and sizes decided that GPS was a hot market and rushed to come out with their own offerings, driving down the price on GPS chipsets from the healthy double digits to low single digits in no time flat… and while the market for GPS chips continued to grow at a healthy clip, the growth wasn’t sufficient to make up for the rapid and severe price decreases, and for SiRF, it wasn’t able to differentiate enough to keep customers from jumping to the no name competition for a few bucks cheaper.

I think I’ll go back and spend some more time with this one to try to learn from my errors. I was a bit suprised that the company never seemed to move very aggresively in the hybrid location technologies beyond GPS, but I am not sure that would have made much of a difference in the end.

CSR seems to bring some specialtise in bringing together hybrid technologies and also has a lot of relatonships with major phone manufacturers that make it look like SiRF will be a great deal for them.

I guess the lesson learned is that apparently it’s not enough to develop a bunch of IP and patents and to focus on one market, and to do just one thing very well in the hyper competitive world of technology today.

I hope there will still be a SiRF Location Ecosystem Summit next year, but I doubt it.

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