14/12/2001 11:13:19 ARM and PicoTurbo Inc. SettleARM Holdings PLC14 December 2001ARM and Picoturbo inc. settle patent lawsuitValidity and enforceability of ARM patents lead to joint agreementCAMBRIDGE, UK and Milpitas, CA. - Dec. 11, 2001 - ARM ((LSE: ARM);(Nasdaq: ARMHY)), the industry's leading provider of 16/32-bit embeddedRISC processor solutions, and picoTurbo, Inc ("picoTurbo"), a privatecompany based in California, today announced they have settled theirlawsuit. Under the terms of the settlement, picoTurbo acknowledges thevalidity and enforceability of ARM's patents and simultaneously has agreedto cease all sales and marketing activities forthwith and assigns theproduct designs and intellectual property assets of picoTurbo to ARM. ARMhas dismissed all claims against picoTurbo. picoTurbo's current customerswill be able to complete existing designs and manufacture their productsbased on such designs with support provided by picoTurbo. Both companieswill work with picoTurbo customers to affect a safe and smooth migrationto the ARM roadmap for future designs. Other details of the settlementremain confidential.Warren East, CEO of ARM said, "I am delighted that we have reached thisagreement with picoTurbo which represents a good outcome for bothcompanies, their partners and customers. The money necessary to continuethe case can now be put to more productive use.""We have always respected the intellectual property rights of ARM.picoTurbo acknowledges the validity and enforceability of the ARM patentsand we are pleased to have reached this agreement," added Chip Stearns,President and CEO of picoTurbo. "The combination of picoTurbo and ARMIntellectual Property will provide a compelling opportunity for ourcustomers going forward".
The 11.30 price jump suggests that the market has been waiting for just such a resolution. Perhaps this highly volatile stock can now resume upward progress.....?
Remember this from last week?"People who are following this should be asking themselves if ARM's valuation account takes into account the current litigation," Stearns said. "ARM took its seven most powerful patents, most applicable patents and filed them against picoTurbo. These are the major weapons in its patent portfolio. For these to be seen as ineffective or invalid has huge implications."And now he says this"We have always respected the intellectual property rights of ARM. picoTurbo acknowledges the validity and enforceability of the ARM patents and we are pleased to have reached this agreement," added Chip Stearns, President and CEO of picoTurbo. "The combination of picoTurbo and ARM Intellectual Property will provide a compelling opportunity for our customers going forward".If I ever need the mileage on my car altering I'll give Mr Stearns a ring.CheersLicence
If I ever need the mileage on my car altering I'll give Mr Stearns a ring.He also knows how to take it out for a spin :)
picoTurbo has now updated their website, www.picoturbo.com, and have provided a .pdf file of Q&As at http://www.picoturbo.com/pT_ARM_Settement_QA.PDF (as ever, picoturbo's spelling reflects their commitment to quality).Earlier today, I read on RB a lifted AFX report which suggested that pT's turnover is around $1M per Q. Clearly this settlement is extremely damaging to them, and the Q&A specifically tells us that "picoTurbo's IP business will not continue for new customers."What the heck, there is no copyright on the .pdf file (I cannot imagine pT having the gall to complain about any infringement anyway). Here is the text.Enjoy.By Bruno Kajiyama, picoTurbo, Inc. Page 1 12/13/01 picoTurbo Q&A about the SettlementARM related Q&AQ1. Are pT employees joining ARM, or are they just transferring across their patents?A1. There are no announcements at the moment, but ARM and pT shareholders are continuing to have constructive discussions.Q2. Is there a possibility you could convert these customers to become ARM licensees?A2. Yes, as we say in the statement, we'll be working to move them across to the ARM roadmap for future designs. picoTurbo current customers will be able to complete existing designs and manufacture their products based on such designs with support provided by picoTurbo. This will take some time and ARM will work with pT's customers in a constructive and friendly manner.Q3. Are there any other outstanding legal issues being faced by picoTurbo which ARM will have to either ringfence or contend with?A3. There are no outstanding issues.General Q&AQ4. What is the settlement ?A4. ARM and picoTurbo have settled the lawsuit: 1. picoTurbo acknowledges the validity and enforceability of ARM patents 2. picoTurbo stops all marketing and sales activities 3. picoTurbo assigned to ARM its Intellectual Property and product designs 4. ARM dismissed the law suit against picoTurbo 5. picoTurbo dismissed its counterclaims against ARM 6. picoTurbo current customers will be able to complete existing designs and manufacture their products based on such designs with support provided by picoTurbo 7. ARM and picoTurbo will work with picoTurbo customers to affect a safe and smooth migration to the ARM roadmap for future designs 8. No outstanding legal issuesQ5. Why did the settlement happen ?A5. Both companies agree that it would be the best solution at this time.Q6. Are there any consequences to picoTurbo customers ?A6. picoTurbo current customers will be able to complete existing designs and manufacture their products based on such designs with support provided by picoTurbo. ARM and picoTurbo will work with picoTurbo customers to affect a safe and smooth migration to the ARM roadmap for future designs. All legal claims related to this case have been dismissed.Q7. Who will support existing picoTurbo customers ?A7. picoTurbo will.Q8. Will existing picoTurbo customers have to pay additional license fees & royalties to ARM for existing designs based on picoTurbo IP ?A8. No.Q9. Can picoTurbo customers continue with their product designs and manufacture products based on picoTurbo IP ?A9. picoTurbo current customers will be able to complete existing designs and manufacture their products based on such designs with support provided by picoTurbo. ARM and picoTurbo will work with picoTurbo customers to affect a safe and smooth migration to the ARM roadmap for future designs.Q10. Are ARM patents valid ?A10. Yes.Q11. How many customers does pT have? Can you give us some of the names?A11. picoTurbo licensed over 42 cores. Customers include Fujitsu-Siemens, Hyundai And eSilicon.Q&A for customers/partnersQ12. What is going to happen with picoTurbo business?A12. Existing picoTurbo customers will continue to receive support for existing designs under their current agreements. picoTurbo's IP business will not continue for new customers.Q13. Can I license next-generation picoTurbo products?A13. No. ARM and picoTurbo will work with picoTurbo customers to effect a safe and smooth transition to the ARM roadmap for future designs.Q14. Is my license agreement being assigned to ARM?A14. No, but picoTurbo customers will continue to receive support under their current Agreements for existing designs.Q15. Who will assist me with my technical needs?A15. picoTurbo.Q16. Will my existing picoTurbo license turn into an ARM license?A16. No.Q17. Will Arm treat me unfavorably because I have a picoTurbo license?A17. No. ARM anticipates that picoTurbo customers will migrate to the ARM roadmap.Q18. Is ARM planning to sue picoTurbo customers with respect to existing designs based on picoTurbo IP?A18. No. ARM has released picoTurbo customers with respect to existing designs.Q&A for Potential Customers:Q19. Can I still sign a license agreement with picoTurbo?A19. No. picoTurbo will assist potential customers who wish to pursue discussions with ARM.Q20. Will picoTurbo cease operations?A20. Existing picoTurbo customers will continue to receive support for existing designs under their current agreements. picoTurbo's IP business will not continue for new customers.Q&A for PartnersQ21. What will happen with current partnership agreements?A21. picoTurbo will continue to support current partners. ARM and picoTurbo will work with picoTurbo partners to effect a safe and smooth transition to the ARM roadmap.
Well it looks like a merger and smells like a merger, is it a merger?So who is this picoTurbo?http://www.picoturbo.com/Products/products.htmlpicoTurbo has developed, designed and validated in silicon two microprocessor cores, which are available for licensing right now. These products were designed for use with applications that require ARM® (version 4T) instructions. Proven in .25u and .18u silicon processes, the pT-100™ and pT-110™ cores offers designers new options that provide high throughput with integrated power management. Combining performance, speed, and cost efficiencies into a compact, high-performance, low-power design, the picoTurbo microprocessor series is a natural solution for applications where battery life and systems cost are critical design goals.The pT-100 and pT-110 microprocessors are available as soft cores, firm cores, and hard cores in multiple formats – including Verilog source code, encrypted RTL, gate-level netlists, and GDSII streams. The multiplicity of formats allows customers to change the aspect ratios of the layouts and port the cores to almost any IC process. These products are fully validated and available for licensing now.The pT-120™ core is an advanced microprocessor core for very high performance SOC designs.picoTurbo microprocessor design, for use with applications that require ARM® (version 4T) instructions, enables customers to leverage existing third party software, RTOS and development tools.Scollag provided this snippicoTurbo licensed over 42 cores. Customers include Fujitsu-Siemens, Hyundai And eSilicon.OK, so these are the big guns?, let's investigate some of the “Value” ARM might reap from these new customers. http://www.fujitsu-siemens.com/rl/aboutus/annual_report/2000/va_joint_venture1.htmlSuccess in the fiercely competitive IT sector requires not only cutting-edge technology; above all, it requires economies of scale to produce the right products at the right price and at the right time. In more ways than one, combining forces is better in this rough and tough environment. For this reason, Fujitsu Ltd. of Japan and Siemens AG of Germany signed a contract in October 1999 to combine their European computer operations into a new venture, Fujitsu Siemens Computers. http://www.fujitsu-siemens.com/rl/aboutus/annual_report/2000/vi_ceo2.htmlA solid foundation to create the futureFujitsu Ltd. and Siemens AG, two global players, combined their European computer operations into a new company, Fujitsu Siemens Computers. When two highly professional companies – each with its own established and successful business – come together, these partners can have difficulty safeguarding their equality. This was something we had given a lot of thought to in advance, but we risked the move, confident of our mutual strengths. We also took the necessary time for the integration process to function. We have now successfully realigned the organization, forged a winning strategy under the leadership of a strong team and implemented a new business model that empowers every country. As a result of this process, we have emerged with a sound business foundation and potential for real growth.Results show improving performanceTurnover for our fiscal year 2000/2001 was € 5.9 billion. This revenue reflects a very strong performance in the second half of the year, proving that we are on the right path with our new strategy.Our mobile PC business grew strongly in line with our strategic focus on Mobility. We increased sales by 46 percent to € 716 million – well above the industry average. Our sales of Unix servers rebounded in the final month, closing the business year up 23 percent. That performance has kept us on course with Business Critical Computing, our second strategic focus.Our profit performance has followed a typical post-merger "change curve". As a result of this – and significantly influenced by difficult market conditions – a pre-tax loss of € 109 million was made in the first half of the year.But due to numerous acitivities and improvements in processes and systems, we have contributed to the turnaround and made a pre-tax profit of € 38 million in the second half year. By all measures, our business development shows a powerful upward swing.Now that's some pretty good revenues and as stated 716m was related to mobility products.A question that comes to mind, is Fujitsu Siemens Computers related to Infineon?http://www.infineon.com/news/press/005_065e.htmInfineon extends core intellectual property portfolio by licensing ARM® processor coresMunich/Germany, May 17, 2000 - Infineon Technologies AG (FSE/NYSE: IFX) today announced it has licensed ARM7™ and ARM9™ Thumb® microprocessor cores from ARM [(LSE:ARM); (Nasdaq:ARMHY)], for the design and manufacturing of core-based super-integrated customer and application specific products. The addition of the ARM cores to Infineon's robust library of existing cores allows the company to offer complex, highly integrated solutions containing both Infineon and ARM technology. It also provides the ability to create custom, hybrid solutions on demand and bolsters Infineon's longstanding ability to provide world-class cores, peripherals and related software. Key synthesizable processors from Infineon include the 16-bit C166 microcontroller, the 32-bit TriCore™ Unified Processor and the Carmel™ high-end DSP cores. Along with the integration of digital, analog and mixed signal blocks, Infineon is rapidly expanding its ability to provide system-on-chip solutions.The embedded RISC cores from ARM, which will complement Infineon's broad portfolio of synthesizable microcontroller and digital signal processor (DSP) cores, will be combined with embedded DRAM for various system-on-chip (SoC) solutions including graphics controllers for PDAs and high-end palmtops, digital still cameras and mobile web browsers as well as other peripheral controllers.Infineon's capability to integrate ARM processors together with large amounts of DRAM, customer specific logic and analog parts on a single piece of silicon is ideal for applications where form factor and costs are critical aspects. In combination with Infineon's leading edge embedded DRAM technology, customers now have an attractive alternative to large, expensive, discrete solutions.Infineon already has two ARM cores so it looks to me that Fujitsu Siemens Computers forged there picoTurbo deal on their own.eSilicon?http://www.esilicon.com/corporate/fact.html#AWho is eSilicon?eSilicon delivers packaged and tested ICs. We are a fabless ASIC company. But we are a chip company with an interesting difference. eSilicon provides truly flexible access to the planning, design, and manufacturing expertise required to realize ideas rapidly in silicon. Flexibility is the key word, and it is evident in every stage of the eSilicon process — from IP selection and die size estimation to logical and physical design, manufacturing, assembly, test, and delivery. The eSilicon strategy is best summarized by the following key attributes: We partner with best in class suppliers We build strategic capability when appropriate We provide customers with a unified ebusiness infrastructure that creates increased efficiencies Our high-quality, fully supported customer experience results in a significant time to market advantage The combination of best in class alliances and value-added original development makes eSilicon a unique fabless ASIC supplierhttp://www.esilicon.com/services/index.htmlOverviewUntil now, customers seeking custom chip implementation have been locked into the traditional ASIC model, which can be inflexible and offers little choice in the decisions that matter most. eSilicon is changing the rules. We provide customers with the ability to make critical decisions up front, including process technology, IP, and implementation strategies. Our experienced internal team can fulfill your design requirements. We also provide access to leading industry suppliers at each step of the design and manufacturing cycle. That's the difference.NetlistIf you want a traditional ASIC engagement, we promise the best customer experience available. We will manage the entire process, from netlist handoff to delivery of packaged, tested parts. We stand behind our offer with comprehensive service and silicon delivery. That's no small promise.So it seems to me they focus on “custom” products of smaller batches.Are they publicly traded? How are they funded?http://www.esilicon.com/corporate/funding.htmleSilicon is currently closing its third round of funding , led by Crosspoint Venture Partners and the Texas Pacific Group. The current round of $10 million will be follwed with a secondary closing of additional funding in the first quarter of 2002.eSilicon completed its second round of private financing in February, 2001, raising $20 million. Tarrant Venture Partners, a venture fund sponsored by the principals of the Texas Pacific Group led this round of funding and were joined by Crosspoint Venture Partners, Catamount Ventures, inSilicon Corporation, and Palmchip Corporation.Crosspoint Venture Partners led the first round of funding for eSilicon with an investment of $5 million in March, 2000Partnershttp://www.esilicon.com/partners/index.htmlSome big names but the extent of business being conducted is not divulged.Hyundiahttp://www.eb-asia.com/registrd/issues/0104/0104eb.htmSOS From Hyundai The world's number two DRAM maker is fighting for survival The clock is ticking. Hyundai Electronics is scrambling to raise cash before year's end when $4 billion of the company's crushing $6.2 billion (7.6 trillion Korean Won) debt comes due. One year after taking over LG Semiconductor, the world's number two DRAM maker is fighting for survival. In 2000, Hyundai reported $7 billion in revenue, up 48% and $1.2 billion in operating profit, up 132%. But when asset sales are factored in, the company actually had a $1.8 billion operating loss. An emergency strategy announced recently has the company selling off all divisions -- cutting the workforce by 25% and raising nearly $800 million -- and becoming a pure-play semiconductor company by summer. Financial trouble began last year when the company took over LG's chip division, raising cash for the purchase through $1.25 billion in corporate bonds. Then Hyundai continued to pour investment into final process technology in its own fabs in order to close the technology gap with DRAM leader Samsung, says Nin Tong Huang, analyst at ABN Amro in Seoul. "That plus the debt [from the merger] made the company suffer a huge [capital] depreciation," Nin says. In hindsight, Nin sees the merger of the chip divisions of Hyundai and LG as a mistake. "Prior to the merger there was no talk about capital expenditure or decision making," he says. Pulling out of debt will be real tough. About 80% of Hyundai's chips are DRAMs, mainly in the commodity area. Over-inventory and a slumping PC market has sent the commodity DRAM market south and analysts have no real consensus as to when prices will bottom out. Some say Q2, others, year's end or even early 2002. The DRAM market grew 20.7% to $29 billion last year, says Steve Cullen, DRAM analyst for Cahners InStat Group. This year he is predicting 20% growth but also a 25% reduction in price per megabit. Moreover, DDR DRAMs, which Hyundai has been hyping in the market, are ramping slower than expected, Cullen adds. Delivering a further blow is the slowing US economy and falling consumer confidence. B.S. Jon, analyst at Daewoo Securities in Seoul, says some 70% of Hyundai's chips are exported to various countries, but in the end are tied to US demand. If the DRAM cycle doesn't show recovery soon, Hyundai may fall into a financial crisis like Hyundai Construction, which went bankrupt, Jon says. ABN Amro's Huang says bankruptcy is possible but not probable. "A debt-to-equity swap is a final solution but banks have become more strict and they don't like to control companies." Capex is certain to get the axe this year. Dataquest Inc in Seoul sees Hyundai cutting the budget 20% to $1.2 billion. R&D may even be reduced a little, according to a Hyundai spokesperson. Moreover, during the merger, the company lost a lot of engineering talent in the precious system LSI area, and the exodus continued after the financial troubles became evident, according to Daewoo's Jon. ABN's Nin believes the most likely scenario is that Hyundai becomes a smaller company with diminished worldwide DRAM marketshare, struggling to stay at the leading edge. The Korean government, which pressured Hyundai to merge with LG as part of a broader economic restructuring drive, wants the company alive. To provide some cash flow, the government is buying Hyundai corporate bonds through the state-run Korea Development Bank. The US government contests the purchase as a subsidy and therefore against WTO rules. But Hyundai's health is linked to a larger issue in Korea. The Korean government injected $3.25 billion into Korea's banking sector to help restructure it. These same banks hold Hyundai's $6.2 billion debt. "If Hyundai Electronics fails, the bank restructuring was useless," Daewoo's Jon says. If, as this snip implies” Hyundai is focused on DRAM, I'm sure a SOC product would add some value to their product line and potentially increase their bottom line.I'm a little more encouraged then I thought I would be about this picoTurbo agreement. I'm not sure why Fujitsu Siemens Computers is pursuing SOC but it looks like eSilicon and Hyundai offer potential.
A question that comes to mind, is Fujitsu Siemens Computers related to Infineon?The core of the Fujitsu part of this traces back through a series of mergers, sales and divestitures to Eriksson Data Systems. Eriksson couldn't make money out of the business so they sold it on to Nokia, who also couldn't money out of it, and sold it on to ICL. ICL used the acquisition to buy market share in Europe, merging the PC operations part of Nokia Data Systems with its own PC operations. Last I heard, the office software side - TeamWare - was still with ICL. ICL even made money out of the PC operations for a while. ICL's UNIX operations were later folded in with the PC operations - ICL had SPARC and x86 platforms, and the latter were sold with both UNIX and MicroSoft operating systems. These were latter transferred to ICL's majority shareholder - Fujitsu - and merged with Fujitsu's PC operations. The joint venture with Siemens was after my time, but this was, AFAIK, another attempt to achieve economies of scale in the commodity PC business.All my interpretation, and subject to errors of recollection; no doubt various management types will give you a different viewpoint.
The core of the Fujitsu part of this traces back through a series of mergers, sales and divestitures to Eriksson Data Systems. Eriksson couldn't make money out of the business so they sold it on to Nokia, who also couldn't money out of it, and sold it on to ICL. ICL used the acquisition to buy market share in Europe, merging the PC operations part of Nokia Data Systems with its own PC operations.Actually Nokia had Nokia Data Siirto before the merger with Ericsson DS. I know I worked in Helsinki for them shortly after the merger. They had a lot of input into Microsoft's plug'n'play ideas but never really made much of a market for themseleves. Also I believe the Fujitsu branch also included a UK company called Apricot. The Siemens side was originally Nixdorf then Siemens Nixdorf.Basically a corporate history of mergers of 3rd rate players to make a bugger 3rd rate player.DD
to make a bugger 3rd rate player.Err I mean bigger! Oh B*ggerDD
Well it looks like a merger and smells like a merger, is it a merger?Hi Will,I don't think so. From what I have read about the settlement, it seems that ARM are permitting picoTurbo to continue to exist as a vehicle for any liabilities accruing from the picoTurbo cores and any associated pT activity. That is why picoTurbo will continue to discharge its existing contractual obligations.I think this is a significantly better outcome than an outright takeover, since it insulates ARM from liability. In fact, the settlement looks rather more like an asset-stripping exercise to me, although I have to say that these (IP) assets are of negligible value to ARM. More important is the plan to migrate picoTurbo clients to ARM, apparently without prejudice. This seems a mature and productive outcome.I have been underwhelmed by the media response to the settlement. The best account I have seen of the events leading up to the settlement is this:http://www.e-insite.net/electronicnews/index.asp?layout=article&articleid=CA186719&spacedesc=newsI think I read somewhere else that ARM were planning to issue revised revenue expectations this week, but ARM's statement tells us that other terms remain confidential. I would be surprised, in view of the acknowledgement of ARM's IP rights, if ARM's accumulated legal costs were not to be reimbursed - presumably this action has effectively been underwritten by picoTurbo's owners. I daresay some analysts are already working on their spreadsheets, at least to eliminate any ongoing litigation costs.It is interesting to note that this outcome seems better in absolute terms than a later crushing victory in court, which would almost certainly have pushed pT into bankruptcy to protect the owners.By the way, I am still thinking about your earlier question on the lack of penetration of Jazelle in the PDA market. More thoughts soon.Foolishly,Scollag.
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