Bay Networks To Acquire New Oak Communications, a Leader in Extranet Access and VPN Technologies
Business Wire - January 14, 1998 08:46
%BAY-NETWORKS BAY %MASSACHUSETTS %CALIFORNIA %COMED %COMPUTERS %ELECTRONICS %TELECOMMUNICATIONS %INTERACTIVE %MULTIMEDIA %INTERNET %MERGERS %ACQ %MANAGEMENT %CHANGES V%BW P%BW
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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