Rockwell is to acquire inflight-entertainment (IFE) supplier Hughes-Avicom International, which will become part of the Collins avionics business.
Hughes-Avicom is number two in the IFE industry behind Japan's Matsushita, with 23% of the market and projected 1997 sales of $120 million, as well as a $150 million backlog.
Rockwell says that its first acquisition since the sale of its defence businesses to Boeing "represents a logical extension of our avionics business into a related market". The company approached General Motors subsidiary Hughes Electronics, the parent of Hughes-Avicom, after studying the IFE market for over a year and after "in-depth discussions" with airlines and aircraft manufacturers.
Rockwell-Collins believes that its experience as an avionics producer makes it "-uniquely qualified to provide reliable, economical [IFE] equipment". The industry has been dogged by reliability problems, particularly with interactive IFE systems. Hughes-Avicom was first to introduce an interactive system, which "works now", the company says.
Hughes-Avicom is working on video-on-demand and live-television systems, the latter with Hughes subsidiary DirecTV. Gulfstream recently signed a deal with the company to become the first aircraft manufacturer to install live-television systems, and Hughes-Avicom notes that Collins already has a strong presence in the business-jet avionics market.
Rockwell says that its Semiconductor Systems business is developing chips to receive and process broadcast digital audio and video and sees an opportunity for a partnership with Collins in developing and making IFE equipment.
Hughes-Avicom welcomed the acquisition, which is expected to be completed by mid-December, citing the avionics manufacturer's "technical knowhow" and the fact that Collins "is well-respected by our customers".
Hughes-Avicom, which had been expected to remain part of General Motors when Hughes Aircraft is merged into Raytheon, admits that it had "struggled for the last couple of years, but has turned around".