FROM WSJ, January 14, 1998
Bay Networks To Acquire New Oak Communications, a Leader in
Extranet Access and VPN Technologies
SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 14, 1998--
Strategic Purchase To Provide Broad Range of Extranet and
VPN Solutions
Bay Networks Inc. (NYSE:BAY) today announced it has signed a definitive agreement to acquire
privately-held New Oak Communications, a technology leader in Extranet Access based in Acton, Mass., for
approximately $156 million in cash and Bay Networks' common stock. The acquisition underscores the "Access"
and "IP Services" cornerstones of the Bay Networks' Adaptive Networking strategy and its commitment to
provide customers with leading-edge technologies that allow scalable, secure and manageable use of the
Internet for private communication, collaboration and commerce. The integration of the two companies' VPN
technologies gives Bay Networks one of the industry's broadest and most comprehensive Extranet and VPN
solutions.
The acquisition will be accounted for as a purchase with Bay Networks exchanging a combination of $133
million worth of Bay Networks common stock and cash of $23 million for all outstanding shares and options of
New Oak Communications. Bay Networks expects to recognize a substantial portion of the acquisition price as a
one-time charge for in-process technology. Bay Networks anticipates that the charge will be taken in the
quarter ending March 28, 1998.
Upon the closing of the transaction, the employees of New Oak Communications will become part of Bay
Networks' Internet/Telecom Business Group (ITBG) with Jeff McCarthy, currently New Oak
Communications president and CEO, becoming vice-president and general manager of Bay Networks' Extranet
Access Division, reporting to Steve Pearse, executive vice-president of Bay Networks' ITBG.
"The acquisition of New Oak Communications further reinforces our commitment to supporting our customers'
Internet business initiatives," said Dave House, chairman, CEO and president, Bay Networks. "New Oak's
Extranet Access Switches are among the first products to combine all of the technology needed by our corporate
and carrier customers to create scalable and robust Extranets and VPNs. We expect this acquisition will give
Bay Networks a significant time-to-market advantage over our competitors in this marketplace."
The Extranet/VPN market is a result of the corporate desire to garner millions of dollars in cost savings by
using the Internet to reach out to remote employees and external partners. Bay Networks believes the
opportunity for companies to use the Internet to reach new customers and create new markets is unprecedented.
Internet Service Providers (ISPs) and Telcos are developing Extranet and VPN offerings to reap new
value-added service revenue. Forrester Research and Infonetics Research project worldwide Extranet
equipment revenues to grow to more than $1 billion by the year 2000, with service-related revenue projected to
exceed $10 billion in the same time period.
The centerpiece of New Oak Communications' breakthrough technology is its directory-enabled software
architecture, which promises to deliver network access based on the user's identity and role relative to the
corporation. The first offering of New Oak Communications' emerging product family will be the NOC 4000
Extranet Access Switch, which combines VPN services with authentication, bandwidth management, routing,
firewall and directory-enabled access in a scalable, manageable hardware platform. The NOC 4000 is designed
to service the needs of large organizations as they migrate from costly, traditional remote access equipment to
scalable, secure and manageable Extranet Access switches. Moreover, it will be an excellent complement to the
carrier class access equipment currently marketed by Bay Networks. The NOC 4000 has moved quickly to
achieve the leadership position in the emerging Extranet market, winning such recent awards as Data
Communications' "Hot Products of 1997," Internet World's "Best of Show" and Networld+Interop's "Best of
Show" finalist. New Oak was also recognized as one of Data Communications' "Top 25 Hot Start-Ups."
"We are focused on delivering Extranet access solutions to corporate and carrier customers that will help them
build world-class networks and dramatically improve the quality of their business communications," said Jeff
McCarthy, New Oak Communications' CEO and president. "That mission is a perfect complement to Bay
Networks' Adaptive Networking strategy and is well supported by our respective product and technology
portfolios." Availability
The NOC 4000 is expected to begin shipping through Bay Networks' distribution and sales channels in the
second quarter of calendar year 1998. Adaptive Networking
Bay Networks' Adaptive Networking strategy addresses three key trends in the networking industry: the
exploding popularity of the Internet; convergence on a high-volume standard Internet Protocol (IP) -- the
"grand unifier" of global network infrastructures and cost-effective hardware based on leading-edge ASIC
(application-specific integrated circuit) technology. These changes will benefit the user with increased
innovation, lower cost, extended product life cycles and "plug-and-play" interoperability for heterogeneous
networks.
Through Adaptive Networking, Bay Networks provides more open, high-level services to customers while
reducing the complexity of their networks. Bay Networks is focusing on key cornerstone technologies --
switching/routing, access, IP services and network management. These transparent, scalable technologies ensure
long-term, non-disruptive network evolution and investment protection; drive operational productivity at
every level of the network and adapt to changes in network usage and business requirements. The hallmark of
Adaptive Networking is the immediate flexibility that the products under its umbrella exhibit to detect and
adapt to changes in network traffic types, volumes and requirements -- both today and tomorrow. About Bay
Networks
Bay Networks - Where Information Flows. Bay Networks Inc. (NYSE:BAY) is a leader in the worldwide
networking market, providing a complete line of products that serve corporate enterprises, service providers and
telecommunications carriers. The company offers frame and ATM switches, routers, shared media, remote and
Internet access solutions, IP services and network management applications, all integrated by Bay Networks'
Adaptive Networking strategy. With headquarters in Santa Clara, Calif., Bay Networks markets its products
and services around the world, providing 7x24 support coverage. For additional information visit the company's
World Wide Web site at baynetworks.com or call 800-8-BAYNET.
This release, other than historical financial information, may consist of forward-looking statements that
involve risks and uncertainties. These statements may differ materially from actual future events or results.
For instance, factors which could cause results to differ from future events include the rate of adoption of new
technology, competitive pricing actions and marketing programs, among others. Readers are referred to the
documents filed by Bay Networks with the S.E.C., specifically the most recent reports on forms 10-K and
10-Q, which identify important risk factors which could cause actual results to differ from those contained in
the forward-looking statements.
New Oak Communications Inc., and NOC 4000 are trademarks of New Oak Communications Inc. Bay Networks
and Adaptive Networking are registered trademarks of Bay Networks Inc. Other brand and product names are
registered trademarks or trademarks of their respective holders.
CONTACT: Bay Networks Inc.
Sandra Toms, 408-495-1181
stoms@baynetworks.com
or
Bay Networks Inc.
Mike Deshaies, 408-495-3292
michael_deshaies@baynetworks.com
or
New Oak Communications Inc.
John Burnham, 978-266-1011, x115
jburnham@newoak.com
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