MaxLinear said it has completed its acquisition of Entropic Communications, a company that specializes in set-top chipsets and Multimedia over Coax Alliance (MoCA) silicon.

The deal, whose original implied value was $287 million when it was announced in February, has existing holders of MaxLinear capital stock with approximately 65% and former Entropic stockholders will hold approximately 35% of MaxLinear's outstanding capital stock.

In addition to broadening MaxLinear's presence in its existing markets, MaxLinear said the acquisition will also add scale and deepen customer relationships in areas such as the satellite pay TV market.

"We are very excited about the opportunity to bring together two talented and largely complementary teams, as we increase our capabilities to solve the most difficult analog and mixed-signal RF challenges in Broadband markets," said Dr. Kishore Seendripu, CEO of MaxLinear, in a statement.

MaxLinear also announced first quarter results Thursday, posting revenues of $35.4 million, up 9% year-over-year, citing demand across its cable and satellite platform solutions, more than offsetting expected seasonal softness in its terrestrial set-top box business. That was paired with a net loss of $4.7 million (12 cents per share), a number that included $2.5 million in fees and expenses tied to the Entropic acquisition, and $600,000 in severance costs related to eliminating engineering ops in Shanghai.

“We are particularly encouraged that the demand for our DOCSIS 3.0 data modem and gateway front end solutions, one of our primary cable growth drivers, experienced a strong shift towards higher-channel-count DOCSIS 3.0 modems and gateways,” the company noted. 

Demand for DOCSIS 3.0 modems that can bond 16 or 24 downstream channels picked up in the fourth quarter of 2014, MaxLinear CEO Kishore Seendripu said Monday during the chipmaker's earnings call.

The resumption of demand for those beefier D3 modems followed a drop-off earlier part of the year, which caused a dip in cable revenues for MaxLinear, a maker of silicon tuners and demodulators for modems, set-tops and other cable and satellite TV gear.  On the cable modem front, MaxLinear has been pairing its tuner products with Intel’s Puma 6 DOCSIS 3.0 silicon.  Intel and MaxLinear have also begun to set their sights on a 32-channel D3 platform and the emerging DOCSIS 3.1 platform, which will support multi-gigabit speeds.  MaxLinear is also looking to expand into other markets, including MoCA silicon, via its proposed acquisition of Entropic Communications.

Seendripu said most “major operators,” including Comcast and Liberty Global, have decided to switch over to D3 modems that can bond 16 or 24 channels – enough to support downstream burst rates of 640 Mbps  and 960 Mbps, respectively in North American DOCSIS systems that use 6MHz-wide channels.

D3 modems that can bond up to eight downstream channels is “in the rearview,” the exec said, noting that less than half of MaxLinear’s shipments now support those channel-bonding counts in cable data gateways.

As a result of the increased demand for higher-end D3 products, MaxLinear’s cable revenue mix rose to 63% in the fourth quarter, versus 59% in the previous period.

MaxLinear posted fourth quarter net loss of $2.4 million (6 cents per share) on revenues of $32.5 million, up 2.9% from the year-ago period.

Update: In August 2018, the judge in Summit County, Utah, who had dismissed two of the original charges and reduced the third charge to an infraction ordered the records of Patrick Henry's arrest, investigation and detention in the case to be expunged.

A Utah court found Entropic Communications president and CEO Patrick Henry guilty of assaulting Beverly Hills Nannies star Ariane Bellamar, but reduced the charge from a misdemeanor to an infraction, while also dropping two of the other charges – damage or interruption of a communication device, and criminal mischief.

According to multiple reports, the court fined Henry $400, and is requiring him to complete 40 hours of community service, and undergo alcohol and anger management assessment. Because an infraction is not considered a criminal charge, Henry will serve no jail time as a result of the court’s decision, which was handed down on June 19.

Entropic’s board of directors said it was confident in Henry’s ability to lead Entropic, a San Diego-based company that specializes in set-top silicon and Multimedia over Coax Alliance chipsets (see below for the company’s full statement).

The original complaint, filed in Utah’s Summit County Justice Court on February 11, alleged that Henry became intoxicated and, in a jealous rage, assaulted Bellamar on January 23 in Park City. She earlier told RadarOnline.com, a celebrity news site, that she met Henry through the MillionaireMatch.com dating site and joined him in Park City for the Sundance film festival. Henry was charged with three Class B misdemeanors: assault, damage of a communication device, and criminal mischief. Henry denied assaulting Bellamar, alleging she was intoxicated, and that her statements were not consistent with the facts.

In an 8K filed on June 23, Entropic noted the company and Henry amended the exec’s employment agreement on June 20 to clarify the conditions under which Henry’s employment may be terminated “for cause.”

“In summary,” the filing explained, “the Amendment updates the definition of “Cause” for termination to add that, in addition to the previously enumerated reasons, “Cause” exists if Mr. Henry is convicted of any felony or misdemeanor charge asserted after the date of the Amendment which, in the good faith judgment of the Company’s Board of Directors, adversely affects the business reputation of the Company.”

In a statement, Entropic said it is standing behind Henry, who has served as Entropic’s president and CEO since 2003:

“Entropic’s Board of Directors is confident in Patrick Henry’s ability to lead Entropic.  The Board closely monitored Mr. Henry’s personal matter. Two of the charges were dismissed and the remaining charge was reduced from a misdemeanor to an infraction, the lowest charge permitted under Utah law.  The Board continues to believe Mr. Henry has the right experience, track record, domain expertise and skillset to continue in his current role as Entropic’s President and Chief Executive Officer.  The Board did amend Mr. Henry’s employment agreement to add reasons that could allow the Board to terminate his employment without severance. Mr. Henry has assured the Board that he is 100% focused on running the business and keeping the Company focused on its strategic priorities. The Company does not intend to comment further at this time."

Entropic Communications, a maker of set-top chips and silicon for products that use Multimedia over Coax Alliance (MoCA) technologies, on Monday set in motion a major restructuring that will result in the closing of several facilities and the laying off of 23% of its global workforce.

The chipmaker also lowered second quarter guidance amid weaker-than-expected June orders.

Entropic said the plan, while painful, will enable it to streamline and focus its R&D efforts, boost operational efficiencies, and accelerate its return to profitability.

Entropic will close several sites and consolidate others in order to maximize engineering and operational efficiencies, while also streamlining product development processes. Speaking on a call Monday night, Entropic CEO Patrick Henry said the company will close engineering sites in Austin, Texas; Israel; Taiwan; and India, and concentrate R&D at facilities in San Diego, Irvine and San Jose, Calif. Entropic will maintain specialized, local efforts in Shanghai and Shenzhen, China; and Belfast, Northern Ireland.

Entropic said it will substantially complete its reorg by the fourth quarter of 2014, the same time it expects to realize about $6 million quarterly savings. Entropic said it anticipates a pre-tax restructuring charge of about $5 million.

Entropic ended the first quarter with about 650 employees, and expects to reduce it to fewer than 500 in the fourth quarter.  

Entropic announced a smaller restructuring last summer that included a 10% layoff.

Henry said a restructuring of this magnitude is “painful,” but “absolutely necessary” as the company looks to speed up its time to probability and achieve its business objectives.  The company said 30% of employees based in sites set for closure are being offered opportunities to relocate to one of the California locations.

The company also lowered Q2 guidance, now expecting revenues of $50 million to $51 million, and a non-GAAP loss per share of 13 cents, down from a range of $53 million to $55 million, and a loss of 10 cents to 12 cents, respectively.

Entropic CFO David Lyle blamed the decline in part to slower than expected orders in June, particularly around MoCA-based adapters as DirecTV continues to ship new Genie Mini devices in higher volumes. In April, DirecTV announced the launch of the Wireless Genie Mini, a video client that connects to DirecTV's central Genie HD-DVR over a secure WiFi connection and is capable of supporting the operator’s full live TV lineup and access to DVR-stored content.

“MoCA is one of the biggest impacts we’re seeing,” Lyle said.

Henry, meanwhile, said Entropic will deemphasize set-top chips with HEVC support targeted to 4K/Ultra HD boxes in the near-term, and will instead focus on HEVC-optimized chips for traditional HD boxes. Entropic has developed a 4K/HEVC decoder, but won’t drive that product in the short term. Entropic expects the market for 4k/HEVC decoders to ramp up in the second half of 2015, Henry said.

While the 4K market is accelerating quickly for TV sets, Entropic is not seeing a “broad-based push” for Ultra HD client products among its service provider partners, except for Comcast, which is working with partners on new boxes for its X1 platform that support HEVC decoding and 4K/Ultra HD.