Ambarella Inc. AMBA recently acquired VisLab S.r.l. in an all cash deal of $30 million. Following the announcement, shares of Ambarella gained nearly 1.5% in yesterday’s after-hour trade.
Founded by Professor Alberto Broggi, VisLab is a pioneer in perception systems and autonomous vehicle research. Per the deal, Broggi along with the Italian company’s 27 researchers will join Ambarella’s advanced computer vision development team.
According to Ambarella, VisLab “has developed computer vision and intelligent control systems for automotive and other commercial applications, including Advanced Driver Assistance Systems and several generations of autonomous vehicle driving systems.”
Therefore, by integrating VisLab’s computer vision and intelligent control systems with its video processing technology, Ambarella will be able to develop high performance products and target its core markets which include automotive, IP security, wearable and flying cameras.
Ambarella develops video compression and image processing semiconductors. The company's products are used in wearable sports cameras, automotive aftermarket cameras, professional and consumer Internet Protocol (IP) security cameras, digital still cameras, digital camcorders and video-enabled mobile phones. The company sells its solutions to original design manufacturers and original equipment manufacturers.
It should be noted that the recent acquisition news came just a week after the company was being criticized for lack of innovation by short-seller Citron Research. Citron in its report stated that Ambarella faces severe commoditization risks and therefore, stiff competition, going ahead.
We believe that the VisLab acquisition will boost Ambarella’s product portfolio and help it to compete with its rivals, especially Israel-based Mobileye N.V. MBLY, currently the world’s leading provider of driver assistance technology.
Moreover, though the acquisition Ambarella will gain VisLab’s customers, thus boosting its top line. It should be noted that the company witnessed a 73.5% surge in first-quarter fiscal 2016 revenues while earnings per share jumped over threefold, mainly driven by strong demand for its products.
Ambarella currently sports a Zacks Rank #1 (Strong Buy). A couple of other stocks worth considering in the electronic component-semiconductor industry are CEVA Inc. CEVA and eMagin Corp. EMAN. Both the stocks have the same Zacks Rank as Ambarella.
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