Phoenix buys Award

Electronics Times, April 27, 1998

Phoenix Technologies has acquired competitor Award Software to form a company that holds the bulk of the merchant market for PC bios software.

But the deal could put in jeopardy some of Award's recent deals in the hardware intellectual property (IP) business.

Award revenues amount to just over a quarter of those of Phoenix, but the acquisition will take the annual revenues of the combined company to more than $100m, with a market capitalisation of $300m.

Both companies are known for their PC bios software, Award specialising in the sub-$1000 category and Phoenix in high-end systems. Both companies have made inroads into the hardware and software business IP for peripheral interface buses such as IEEE1394 and USB.

Award has signed deals with hardware IP suppliers such as Sand Microelectronics to supply its firmware as part of the package. Phoenix already has a hardware IP division in the form of its Virtual Chips subsidiary, so Award's deals could be in danger.

Although analysts welcome the move, some have downgraded Award because Phoenix's purchase price of 1.225 shares for each Award share valued the smaller company at less than the $16 to $18 per share that had been hoped.

Jack Kay, president of Phoenix, will continue as president and CEO of the combined company, with Award's chairman George Huang reporting to him as head of the Award Software division.

Kay says the merger will help reduce overheads by spreading fixed development costs over more licences: 'Our customers ask us to increase our investments in new technologies, such as Intel's 64bit Merced processor and software for sub-$1000 PCs. But, they also want us to lower costs and maintain competitive pricing.'