Adaptec Serial ATA II RAID 2420SA Card

Adaptec, the Silicon Valley maker of controllers and processors for storage devices, has made an agreement to sell its RAID controller business to PMC-Sierra, a provider of a diverse group of components for IT equipment, which includes controllers and processors.

The seller said it will use proceeds from the $34 million deal and its $400 million in cash and securities to "redeploy capital," according to a news release.

Adaptec did not explain specifics of its strategy for leveraging the company's liquid assets, saying only that redeployment options included stock buybacks and acquisitions.

The currently unprofitable company has been under pressure from stockholders to change course.

"This transaction with PMC-Sierra, which represents the sale of a small portion of the company's total assets ... continues the process of moving the company away from its previous unprofitable identity as a 'pure-play' technology company," Adaptec board chairman Jack Howard said in a statement, pledging that the board will "aggressively pursue opportunities to deploy the significant cash and liquid assets on hand to create value for the company's stockholders."

Over the past year Adaptec went from a modest income of $0.1 million in the third quarter of fiscal 2009 to a net loss of $7.5 million in the third quarter of fiscal 2010, ended January 1.

The company's revenue in the last reported fiscal quarter dropped to $16.9 million from $28.2 million one year ago.

The seller will retain its Aristos ASIC business it bought in 2008 for $41 million, more than 200 patents, real estate and the aforementioned cash and securities assets. Adaptec expects to close the sale in about 30 days.

According to a PMC-Sierra news release, a key benefit of the transaction for the buyer will be access to Adaptec's established OEM and channel partners.

The company expects total channel revenue from x86 RAID products to be about $200 million and says Adaptec is the second largest provider of x86 RAID solutions to channel players.