SimpleTech Acquires Startup Irvine Networks
By ANDREW SIMONS
Santa Ana-based memory products maker SimpleTech Inc. has acquired Irvine-based Irvine Networks LLC for about $3 million in cash, according to sources familiar with the deal.
SimpleTech, which closed the deal last week, had been in talks with Irvine Networks for months. Company officials plan to disclose the buy on Thursday, when SimpleTech is set to report fourth-quarter earnings.
“It’s purely an acquisition for the technology,” said a source familiar with the deal.
Not much is known about Irvine Networks, which has been in “stealth mode” since opening its doors in 1999. But sources say the company is making what’s called a “content processing switch”,a piece of hardware that helps speed the processing Web pages on Internet servers.
Irvine Networks says its switch “will make it a lot less expensive to deliver a lot more content a lot faster than is currently possible.”
The acquisition is a shift for SimpleTech, which makes memory boards and cards for personal computers and mobile electronics.
“We’ve always been a company that’s diversified,” said Manouch Moshayedi, SimpleTech’s chief executive. “We always like to find new companies and sell their products through our channels.”
The deal also signals that SimpleTech is hungry for acquisitions again. The company had shelved its buying strategy following Sept. 11.
“We looked at many companies over the last year and they turned out to be nothing,” Moshayedi said.
Last year, SimpleTech weighed a bid for fellow Orange County memory products maker Viking Components Inc.
As of Sept. 30, SimpleTech counted $45 million in its coffers and little debt. SimpleTech also is among the few publicly traded memory companies with a market value of about $170 million as of last week.
SimpleTech’s stock has been on an upswing of late, with the company’s market value more than doubling in the past six months. SimpleTech has bought back some of its shares and hasn’t seen the layoffs its peers have in the past year as memory prices have sunk to all-time lows.
The Irvine Networks buy could be a sign that SimpleTech is expecting memory prices to continue to rebound. The price for the most basic form of computer memory has gone up about 27% in the past three few weeks, reversing a yearlong decline.
The sharp decline in the price for memory,exacerbated by a slowing economy and lackluster computer sales,has caused nearly all memory companies to tighten belts.
Fountain Valley-based Kingston Technology Co. and Rancho Santa Margarita-based Viking both have cut jobs as they try to reconcile their spending with slower sales. SimpleTech has scaled back its expansion plans.
