Horsham, Pa. -- Sony Corp. has completed its purchase of
7.5 million shares of General Instrument Corp., a maker of digital and analog set-top
boxes for the cable industry based here, for $187.5 million.
The deal, which was delayed about a year -- it was first
announced in January 1998 -- will give Sony around 4.5 percent of General
Instrument's outstanding shares. The purchase price works out to be about $25 per
share. General Instrument's stock, traded on the New York Stock Exchange, closed at
$34.625 per share on Jan. 28.
Originally, the alliance was supposed to focus on
Sony's manufacturing and retail clout as digital set-tops were rolled out to
consumers. In past months, however, the emphasis has shifted toward Sony's software
in transmitting high-definition television signals and offering interactive applications.
GI has aggressively used equity to land alliances with Sony
and other key cable customers. Since 1997 the company has issued warrants for about 16
percent of its stock to nine MSOs, tied to digital set-top orders that could amount to
$4.5 billion in sales for GI.
The majority of that order went to Tele-Communications Inc.
In a separate transaction, the Englewood, Colo.-based cable operator received about 10
percent of GI's equity in a sale of the security portion of TCI's Headend in the
Both Sony and GI also demonstrated joint technology
applications at the December Western Show in Anaheim, Calif., including a GI DCT-5000
advanced set-top running Sony's "Aperios" real-time operating system and
"Home Network Module" middleware. Applications included video telephony and
on-screen management of home electronic appliances.