Digi purchases Rabbit Semiconductor for $49 million

Minnetonka, MN—To combine complementary product lines and enhance its position in the device networking market, Digi International reports that it has acquired Rabbit Semiconductor Inc., previously known as Z-World Inc., for $49 million in cash.


Minnetonka, MN— To combine complementary product lines and enhance its position in the device networking market, Digi International reports that it has acquired Rabbit Semiconductor Inc. , previously known as Z-World Inc., for $49 million in cash. Digi bought all of Rabbit’s outstanding shares and stock options. Rabbit will became a wholly owned subsidiary of Digi, which plans to retain Rabbit's office in Davis, CA.

'The combination of Digi and Rabbit is very exciting because there is such a tight strategic and cultural fit,' says Joe Dunsmore, Digi’s chairman, president, and CEO. 'The product lines are complementary, and the product and channel synergies will provide tremendous growth potential for the future. Conservatively, we believe the acquisition brings an incremental $100 million of addressable market, which we believe will roughly double in four to five years.'

Digi expects Rabbit to contribute more than $2 million in revenue for the third fiscal quarter of 2005, and more than $7 million for the fourth fiscal quarter of 2005. Digi further expects Rabbit to contribute more than $31 million in revenue in fiscal year 2006.

Digi also anticipates that one-time expenses associated with buying Rabbit will reduce its earnings per diluted share by $0.04 to $0.06 for 2005’s third fiscal quarter. Digi expects the acquisition to be accretive by $0.01 to $0.02 per diluted share in 2005’s fourth fiscal quarter. For fiscal year 2006, Digi anticipates Rabbit to be accretive by $0.03 to $0.06 per diluted share. Digi expects Rabbit's gross margin to be in a range of 51% to 53% in fiscal 2006.

Norm Rogers, Z-World’s founder and CEO, adds that, 'Digi is a perfect match for us, as we're in adjacent segments of the same business. We understand each other and our corporate cultures are compatible. Our products fit together rather than butting against each other. I am confident this will be a highly successful combination.'

Rabbit manufacturesand devices that typically require connections to the Internet. These solutions are used in building security, point of sale, parking systems, telecommunications, vehicle and ship systems, container tracking, and other applications. Similar to Digi, Rabbit bundles hardware and software together, creating an engineer-friendly development environment. Its customers include Lockheed, Boeing, McDonnell Douglas, IBM, GM, Ford, and NASA, along with thousands of small- and medium-sized companies.

Rabbit’s products are primarily applied to endpoint devices and applications, such as sensors, meters, vending machines, card readers, and scales. There are very stringent power, physical size, and software code size constraints often associated with these kinds of devices. Meanwhile, Digi’s products, including its ConnectCore and Connect ME embedded modules and NetSilicon's Net+ARM microprocessors, are typically used in integration point devices, such as access control systems, alarm system controllers, HVAC controllers, industrial drives, as well as in more complex endpoint devices, such as kiosks, industrial printers, RFID readers, and security cameras. Requirements for these devices typically include higher data speeds, larger and more complex software, and often a graphical user interface.

Digi adds that acquiring Rabbit gives it the widest range of embedded device networking solutions in the industry. This allows device manufacturers to select from a menu of microprocessors, operating systems, microprocessor-based modules, and single board computers that best fit their application, volume, cost, and time-to-market requirements.

Control Engineering Daily News Desk
Jim Montague, news editor

No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Additive manufacturing benefits; HMI and sensor tips; System integrator advice; Innovations from the industry
Robotic safety, collaboration, standards; DCS migration tips; IT/OT convergence; 2017 Control Engineering Salary and Career Survey
Integrated mobility; Artificial intelligence; Predictive motion control; Sensors and control system inputs; Asset Management; Cybersecurity
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me