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Technology Stocks : Compression Labs, Inc (CLIX) - an Acquisition Target
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To: E_K_S who wrote (369)5/17/1997 9:28:00 PM
From: leland L. Tsai   of 375
 
Eric,

Just sent out my "for" vote. IMO, the benefits of a merged company are:

1. To establish as a clearly No 1 player in the high end video conf. to avoid competing againest each other.
2. Combine two teams to jointly work on newtork centric video conference systems. This is going to be a fast growing area.
3. New VTEL can be a better global player (Vtel is strong in Europe +
CLIX is strong in China) to counter competitors, such as Sony, PCTL.
4. Cost saving from combining sales teams:
New VTEL will have 270 (Vtel 153, Clix 120) people in sales and marketing. The average sales per head is less than $1M, which is way too low in communicaton industry. Saving can be derived from closing duplicated offices and reducing staff.
5. Saving can be done from combining manufacturing. CLIX has 87 people and Vtel has 55 people in manufacturing. Given the volume production they have, the manufacturing can be consolidated.
6. Vtel just picked a new COO with tech. savvy and operation experience in managing transition. Good move.

Eric, I have two questions for you:

1. The video conference market was projected to be growing at 40% per year. But the recent quarter reports from PCTCL, Vtel and CLIX seem to suggest the growth rate is flat. What went wrong?
2. What is the chance of completing the merge? If not, IMO, Clix can be in big trouble given the cash position and customers' expectation that the merge will be passed.

Thanks for your various information and hope the merge will be approved by the shareholders of both companies.
Eugene Tsai
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