Adaptec’s decision to sell its RAID business to PMC-Sierra leaves the storage vendor a shell of its former self, with a small ASIC business, 200 patents, $400 million, and little else to show after 26 years of business.
The sale is also the latest in a string of acquisitions that is consolidating the storage networking industry.
Adaptec, which was once a top provider of storage networking components, on Monday said it agreed to sell its data storage hardware and software business to PMC-Sierra for about $34 million in cash.
According to an SEC report Adaptec filed on Thursday, the sale includes assets related to the company’s ASICs, HBAs, RAID controllers, RAID software and RAID code, storage management software, and other solutions that span SCSI, SAS, and SATA interface technologies.
What will happen with the rest of the company’s assets is still an unknown. Adaptec said it will consider its options related to its Aristos ASIC technology business, remaining patents, and its real estate holdings, including possible sale of those assets.
Those asset sales may already be starting. Adaptec is shutting down its Lake Forest, Calif.-based office, according to the Orange County Business Journal. That office came with Adaptec’s 2008 acquisition of Aristos Logic.
Adaptec executives were not available to discuss the sale or the future of the company.
The sale of its storage business is the latest in a slow decline of Adaptec.
The most significant change in the last couple years was the sale in late 2008 of its Snap NAS division to Overland Storage. For that sale, Adaptec received a mere $3.6 million, a far cry from the $100 million Adaptec paid to acquire Snap in 2004.
More recently, Adaptec in December saw the departure of Subramanian ‘Sundi’ Sundaresh as president and CEO.
In January, the company reported revenue for its third fiscal quarter of $16.9 million, compared with $28.2 million in the same period one year ago. The company also reported a loss of $7.5 million, or 6 cents per share, compared to a profit of $0.1 million in the prior year.
The sale of Adaptec’s storage business is only the latest in a series of acquisitions that have riled the storage adapter business.
Next: The Storage Networking Business Consolidates
Other moves to consolidate the business include Exar’s acquisition of Neterion and LSI’s acquisition of 3Ware.
Exar, the Fremont, Calif.-based developer of silicon, software, and subsystems for the storage, communications, and consumer electronics markets, in March acquired Neterion, a Sunnyvale, Calif.-based builder of 10-Gb Ethernet adapters for the server and storage market, for about $10 million.
LSI, a Milpitas, Calif.-based builder of storage and networking ICs, adapter, and systems, in mid-2009 acquired the 3ware RAID adapter business of Applied Micro Circuits Corp. (AMCC) for about $20 million in cash.
For PMC-Sierra, which has traditionally focused on developing silicon solutions for the storage, WAN, and laser printer industries, the acquisition of the Adaptec assets is a big opportunity to expand its channel business.
Greg Lang, president and CEO of PMC-Sierra, said in the Monday conference call announcing the acquisition that about 40 percent of the x86 server RAID market revenue is generated through the channel, and that Adaptec has the right technology and channel relationships for PMC-Sierra to move into that part of the business.
“Going forward, we will start work to bring 6 Gb-per-second SAS solutions to the reseller channel based on PMC silicon. This synergy will allow us to grow the storage channel business over the next few years,” Lang said, according to the transcription of the conference call.
The sale of Adaptec’s storage business was not a surprise to the channel, as Adaptec had been talking about a possible sale for some time.
One custom system builder, who preferred to remain anonymous, said that his company was visited by Adaptec sales reps just a couple of weeks ago to discuss the Adaptec RAID card roadmap.
“They were bragging about how good their cards were,” the system builder said. “But when I heard in November that parts of Adaptec were on the auction block, we started doing less and less with them.”