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Cabletron To Acquire Switch Router Visionary-- Yago Systems, Inc.
Business Wire - January 14, 1998 16:15
%CABLETRON CS %NEW-HAMPSHIRE %MASSACHUSETTS %COMED %COMPUTERS %ELECTRONICS V%BW P%BW
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ROCHESTER, N.H.--(BUSINESS WIRE)--Jan. 14, 1998--
Combined Solutions Extend Network Capabilities, Providing a Higher-Performance, Lower-Cost Alternative to Traditional Routers
In another bold move to expand its solutions-oriented offerings for the enterprise and service-provider markets, Cabletron Systems (NYSE:CS) today announced it will acquire privately-held Gigabit Ethernet and switch router visionary YAGO Systems, Inc. The acquisition underscores CabletronUs commitment to provide affordable, standards-based solutions that extend network performance and bandwidth far beyond the capabilities of traditional router-based network infrastructures. Under terms of the definitive agreement, Cabletron will issue 6.1 million shares of stock to the shareholders of YAGO in exchange for all of the capital stock of YAGO not currently owned by Cabletron. Cabletron currently holds approximately 25 percent of YAGO's capital stock, calculated on a fully-diluted basis. Cabletron has agreed to issue up to an additional 5.5 million shares of Cabletron stock to the former shareholders of YAGO in the event the shares originally issued in the transaction do not attain a market value of $35 per share 18 months after the closing of the acquisition. The acquisition aggressively positions Cabletron, a worldwide leader in the modular switch market, with one of the world's highest performance, lowest-cost, multi-layer switch/router solution. By implementing routing functionality in high-speed ASICs, YAGOUs technology delivers more than 100 times the performance of traditional routers at a fraction of the cost. YAGO's unique technology maintains wire-speed performance, when providing quality of service (QoS), full RMON 2 support and Access Control List functionality. "Cabletron's acquisition of YAGO and its revolutionary switch router technology reflects our strategy to quickly exploit high-growth business opportunities," said Don Reed, Cabletron's president and CEO. "YAGO's revolutionary technology gives Cabletron a standards-based routing solution to complement our award-winning SmartSwitch, SPECTRUM and SecureFast offerings." According to a recent Dataquest end-user survey, nearly half of all sites currently using backbone routers plan to integrate switch routers in the next two years. Dataquest projects the market for switch routers to reach $2.2 billion by the year 2000.(a)
Switch Router The changing demands on corporate networks, including explosive traffic growth from bandwidth-hungry applications such as the Internet and electronic commerce and the centralization of key network resources, all contribute to requirements for higher-speed networking technologies to solve bandwidth congestion. Traditional routing products are no match for the high-bandwidth requirements being placed on today's networks. Software-based routers, while richly featured, are slow and unable to address latency and quality of service issues required by next generation applications. To address these new requirements, network managers need products that deliver both performance and functionality. YAGO's MSR family of MultiLayer Switching Routers will deliver an unparalleled combination of benefits, including routing throughput between 15 and 30 million packets-per-second, delivering wire-speed routing at gigabit rates. Extensive management capabilities are also provided, including application-level control which can be leveraged for capacity planning and service-level requirements.
Availability Products are expected to begin shipping through Cabletron in the first half of this year. Cabletron is also expected to articulate its Layer 3 connectivity plans and product lines at the upcoming COMNET trade show in Washington, D.C., January 27 - 29.
About YAGO Founded in 1996, YAGO Systems designs, builds and markets Enterprise and ISP-class backbone solutions that employ Gigabit Ethernet technology. YAGO's Multilayer Switching Router technology sets the standard for performance and functionality by delivering wire-speed, full-function routing at gigabit speeds, pinpoint control over application usage, and the capacity to handle Enterprise and ISP backbone traffic. Network World recently named YAGO one of the top "Ten Companies to Watch," for 1998, while Data Communications named the company one of "The Top 25 Hot Startups" in its October 21, 1997 issue.
About Cabletron Cabletron Systems, a recognized leader in providing high-performance computer networking products, has provided dependable network access and communications to millions of people throughout the world. With scaleable products designed for Fortune 1000 enterprise networks, service providers and small businesses, Cabletron provides simple, reliable and cost-effective business solutions for the information age. Certain statements in this press release concerning Yago and Cabletron constitute forward looking information. The actual results achieved by Cabletron following the acquisition could differ materially. Among the factors that could cause actual results to differ are delays in completing the development and introduction of products based upon Yago's technology, competition from existing competitive products and new products expected to be introduced, the difficulty of integrating Yago and Cabletron, including the difficulty of coordinating geographically separated organizations, and the distraction from day-to-day business resulting from the required dedication of management resources. For a more detailed discussion of the risks and uncertainties related to the Company's business, please refer to the Company's Annual Report on Form 10-K for fiscal 1997.
(a)"Changes in the LAN Backbone: Switching, Routing, and Network Protocols," November 24, 1997. Yago Systems, Inc. can be reached on the Internet at http/www.yagosys.com . Cabletron's World Wide Web site can be reached on the Internet at http//www.ctron.com .
Conference Calls
4:15 pm E.S.T. - Reporters and Industry Analyst Only 800-857-9634 passcode 4822887 Instant replay through 1/21/98 402-220-9716
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CONTACT: Cabletron Systems
Darren Orzechowski, 603/ 337-1282
darreno@ctron.com
OR
Cabletron Systems
Jim Caldwell, 603/ 337-4225
jcaldwell@ctron.com
OR
YAGO Systems, Inc.
Andrew Feldman, 408/ 774-2900 ext. 246
afeldman@yagosys.com
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