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Technology Stocks : TLAB info? -- Ignore unavailable to you. Want to Upgrade?

To: Mike who wrote (6328)	12/25/1999 11:18:00 PM
From: Beltropolis Boy	Respond to of 7342

EET's take on the acquisition. ----- Tellabs to buy Salix for $300M in stock By Loring Wirbel Electronic Engineering Times 12/22/99, 3:23 p.m. EDT eet.com LISLE, Ill. - Tellabs Inc. agreed to acquire Salix Technologies Inc. (Gaithersburg, Md.) on Wednesday (Dec. 22), giving the telecommunications specialist an edge in "mediation-switch" packet/circuit architectures that can replace Class 4 and 5 switches in telephone carrier networks. When the acquisition is completed, only two of the original "Gang of Five" mediation-switch startups -- Sonus Networks Inc. and Convergent Networks Inc. -- will remain independent. TransMedia Communications Inc. was acquired by Cisco Systems Inc., and Castle Networks Inc. was absorbed into Siemens AG's U.S. spin-off, Unisphere Solutions Inc. Tellabs will offer approximately 4.6 million shares of stock for all assets of Salix, a company with roots in U.S. Department of Defense research efforts to build large systems that could interface packet networks with time-division-multiplexed circuit-switched systems. Dan Simpkins, founder and chief executive of Salix, said discussions between the two companies came about after executives compared the Tellabs AN2100 Gateway Exchange switch and the Salix Enhanced Telephony Exchange 5000 chassis. While there were minor overlaps, the complementarity of the architectures led to business discussions. "From the beginning, Tellabs was impressed with the ETX 5000, and we realized we shared visions of the directions of the public network moving forward," Simpkins said. Tellabs has been on an acquisition binge throughout 1999, following its failure to merge with Ciena Corp. in late 1998. In mid-year, it acquired Netcore Systems Inc., developer of Everest, the high-end Internet Protocol routing switch. Then two months ago Tellabs bought DSP Software Engineering, a specialist in board-level DSP products for voice packetization. Simpkins said that Salix could make immediate use of technologies from DSP Software Engineering, as well as from Coherent Communications Inc., a company Tellabs acquired two years ago for its expertise in echo cancellation, and which has since become the center of Tellabs' component-level OEM expertise for echo cancellation. Closer links Prior to its merger discussions with Tellabs, Simpkins said, Salix was talking to Coherent executives about using the embedded cancellation technologies in next-generation switches. The fact that Coherent's offices are close to Salix headquarters will increase the opportunity to collaborate, once both companies are under the Tellabs umbrella, Simpkins said. Tellabs chief executive Michael Birck went further, telling analysts in a Wednesday conference call that "almost everything Salix is involved in has synergies with what Tellabs does." Harvey Scull, executive vice president of advanced business development at Tellabs, added that Netcore's work with advanced IP architectures in the control plane will have direct relevance to Salix's switching work. The Salix group will operate independently as the Salix switching division within Tellabs' adaptive network solutions division. Simpkins will serve as vice president and general manager of that group. He said that the AN2100 and ETX 5000 groups not only will look for opportunities for joint development and joint sales, but will jointly promote the concept of soft switching, in which common hardware architectures are used for packet and circuit switching and call features are downloaded as pure software enhancers to the switch platform. Simpkins said he fully anticipates having to compete with large companies with hybrid-switch expertise, such as Lucent and Cisco, as well as with continued independent companies such as Convergent. The Tellabs acquisition gives Salix the ability to compete effectively against both groups, he said.