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To: Czechsinthemail who wrote (1342)	7/9/2002 8:15:12 PM
From: The Ox	Read Replies (1) \| Respond to of 1698

fwiw, http://www.siliconinvestor.com/readmsg.aspx?msgid=17664165 Novanet closes two years after $150m acquisition by Conexant The 35 employees have been dismissed. Novanet developed high-speed telecommunications components. Moran Bar-Kochva 27 Jun 02 11:15 ISRAEL Two years after it was bought for $150 million by US company Conexant (Nasdaq: CNXT), one of the world's largest producers of telecommunications components, Novanet shut down yesterday, sources inform ''Globes''. The company's 35 employees were fired, and its Raanana branch was closed. In July 2000, at the height of the telecommunications bubble, Conexant bought Raanana based Novanet, which had been set up two years previously by Avishay Noam. The company specialized in developing high-speed components for Internet infrastructure and for telecommunications networks. The price was made up of $35 million in cash and $115 million in Conexant shares. A year ago, Conexant split its business into two divisions, one of which was given the name Mindspeed, while the second remained under the Conexant brand. Novanet was incorporated into the Mindspeed division. At the same time Conexant's Herzliya development center was split up. The Conexant division has some 70 employees in Israel in two branches, while the Mindspeed division had some 80 employees, also in two branches, Herzliya and Raanana. Yesterday, all former Novanet employees were dismissed, apart from three senior workers who transferred to the Herzliya development center. At the time of the acquisition, Conexant was worth about $10.6 billion, but many saw it as a competitor on a par with larger companies such as Broadcom (Nasaq:BRCM) and PMC-Sierra (Nasdaq: PMCS), which at that time had market capitalizations several times that of Conexant. The shareholders in Conexant at the time of the deal were Novacom (57%), Ericsson (Nasdaq:ERICY) (40%), and C. Mer, which owned 3% of Novanet directly and also owned 38% of Novacom. The other shareholders in Novacom were founder Avishay Noam (37%), Eli Borovsky (23%), and the employees (1%). Mindspeed's management explained to the company's employees that there was no market for the component's they had developed. , The Novanet acquisition was meant to enable Conexant to expand and accelerate the development of high-speed components for the telecommunications market, in particular a component enabling transmission at 2.5 Gbps on SONET/SDH protocol optical networks. These networks are the infrastructure for the Internet, mainly for data communications over middle and long distances. With the collapse of the CLECS and the decreased ability of the established communications providers to raise capital, demand for advanced optical networks fell substantially. ,It seems that like other companies that aimed at the optical components market, such as Chromatis, Novanet too has paid the price of a disappearing market. The biggest gainer from the acquisition was company founder Avishay Noam, who said that Novanet was built from the start to be acquired by one of the US giants. , At the time of the acquisition, he said that there was a rival bidder, but that he did not regret what was considered at the time to be a low price. "You don't always have to be greedy. Plenty of companies waited and waited, and in the end got nothing, because their window of opportunity to be sold was very narrow." , Mindspeed Israel president Mishael Agami confirmed the report of Novanet's closure. "In the light of the slowdown in sales and the estimate that reaching breakeven would take much longer than expected, plus the information we receive from customers showing that the market has been much slower since the beginning of the year, we decided to focus more sharply and to cut costs. We therefore dismissed 30 people, but the Raanana branch may continue in operation, with workers from Herzliya transferring to it." Published by Globes [online] - www.globes.co.il - on 27 June 2002 globes.co.il