Infineon gets out of the wireline business

Infineon's latest move to sell its wireline communications business to Golden Gate Capital for $348 million is yet another example that the carriers' slowing capex spending cycles are having major effects on the telecom vendor community. Infineon CEO Peter Bauer said the sale is "an important step in our overall refinancing process," in an official statement. This sale will allow the company to effectively guide it through its ongoing refinancing process, one that has helped them raise around $250 million from the debt markets.

Given the recent performance of the company's DSL and VoIP business, the sale should not be all that surprising, as revenue for the unit has been less than stellar. For the first half of 2009, the wireline unit's revenue was $232 million, a 20 percent drop from 2008, while the unit's operating profit decreased 57 percent to $4.2 million. The company says it now will focus on four key areas: Automotive (ATV), Industrial & Multimarket (IMM), Chipcard & Security (CCS) and Wireless Solutions (WLS).

The divestiture of its wireline business draws a sharp contrast to the company's previous stance around the DSL CPE market segment. It was only a short two years ago that Infineon--seeing an opportunity to cash in on the burgeoning DSL CPE business--purchased Texas Instruments' DSL CPE unit. Of course, Infineon is not the only chipset vendor making deals in the DSL chipset market segment. Just this April, Ikanos acquired Conexant's DSL business for $75 million. Meanwhile, the other major DSL chipset vendor Broadcom has been relatively quiet on the M&A front.

For more:
- here's the official release
- LightReading Europe has this report

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