Real news:
Tuesday May 19, 9:00 am Eastern Time
Company Press Release
BroadBand Technologies Announces Agreement With Bosch Telecom for Expanded Strategic Alliance
Companies Will Combine Expertise To Deliver Full Service Access Network Solutions
RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--May 19, 1998-- BroadBand Technologies, Inc. (NASDAQ:BBTK - news), a leading provider of integrated access platforms for the telecommunications industry, today announced it has expanded its strategic alliance with Bosch Telecom Gmbh to include developing, manufacturing and selling Full Service Access Network (FSAN) Standard products.
BroadBand and Bosch have signed a comprehensive agreement that includes $14 million in cash payments to BroadBand, royalty payments to BroadBand, cross transfers of intellectual property, a transfer of BroadBand employees and equipment to Bosch, international manufacturing and distribution agreements, as well as future cross supply agreements. Under the agreement, the companies will develop products to meet the emerging, global FSAN Standard. By utilizing the resources and expertise of both companies, BroadBand and Bosch seek to develop and accelerate time-to-market for FSAN-compliant product offerings.
''A key component of BroadBand's new business strategy is to broaden the company's participation in the broadband global access markets though an international alliance that enhances the FLX technology,'' said David E. Orr, president and CEO of BroadBand Technologies, Inc. ''We look forward to this expanded relationship with Bosch and to the continued execution of BroadBand's strategic goals. This alliance, combined with the other elements of its strategic plan, will enable BroadBand to reduce its cash consumption and significantly expand its market opportunities.''
Bosch Telecom is the $2.9 billion telecommunications unit of the $27 billion German-owned Robert Bosch group of companies. It is a leader in Europe and other parts of the world, providing narrowband and wireless services to service providers through its advanced access systems.
FSAN is a global standard being developed by a 23 member interest group which includes twelve international and eleven U.S. telephone companies, including SBC, BellSouth and GTE, as well as Bosch and BroadBand. The FSAN initiative is creating requirement specifications for access systems that provide both broadband and narrowband services.
The FSAN standard is very similar to the architecture of BroadBand's existing iFLX(TM) product. Both architectures incorporate high bandwidth, asynchronous transfer mode (ATM), passive optical network (PON) and Digital Subscriber Line (xDSL) technologies. By using the iFLX platform as the broadband foundation for the FSAN products and investing in additional development, the companies expect to have a distinct time-to-market advantage in developing FSAN-compliant products.
Terms of the Definitive Agreement include, but are not be limited to, provisions for the following:
In return for the intellectual property rights for its iFLX product, Bosch will pay BroadBand $12 million. In addition, Bosch will pay approximately $2 million to BroadBand to purchase development, computing and test equipment and to reimburse BroadBand for certain FSAN development expenses. BroadBand will transfer to Bosch co-ownership rights of its iFLX intellectual property and sole ownership of foreign patents and exclusive international distribution rights to the iFLX product. BroadBand will retain exclusive manufacturing rights to supply Bosch with the iFLX product. Approximately 40 BroadBand engineering and international marketing employees will be transferred to Bosch at the closing of the definitive agreement. In addition to the $12 million for the iFLX intellectual property (IP) and product rights, and the $2 million for development, computing and test equipment/reimbursement for expenses, Bosch has made a commitment to invest in the FSAN product development work, subject to certain market development criteria. BroadBand will have access to the Bosch IP via the cross intellectual property transfer provisions of the agreement. Once the FSAN products are completed, BroadBand will have exclusive U.S. and Canadian distribution and manufacturing rights except for sales incidental to wireless and certain specific customers. Bosch will have exclusive international rights. BroadBand also will receive a 3.5 percent royalty on FSAN product sales by Bosch. Restrictions on sales by both companies will terminate over time, at which time the companies will compete in both the U.S. and international markets. The companies also will execute cross supply agreements that will govern transfer prices within six months of the closing.
The FSAN agreement with Bosch is subject to approval of Hart, Scott, Rodino Act filings from the Department of Justice's Antitrust Division and other conditions to closing. Closing is expected to occur in early June.
Strategic Focus on Local Loop Access
With today's announcement, BroadBand has initiated the second element of its new business strategy. In February, BroadBand announced a three-part strategy to improve its financial position and target emerging needs in the established, high-growth local loop access market. As the first of the three initiatives, BroadBand signed multiple agreements with Lucent Technologies worth in excess of $50 million over three years. The second initiative, completed today, was BroadBand's intention to form a strategic alliance to evolve the iFLX platform to meet the emerging FSAN standard. Rounding out the new strategy, the company's third strategic initiative has begun and involves development of an access product that capitalizes on its core competencies in ATM, broadband access and xDSL, as well as intellectual property BroadBand is receiving from Lucent. This new corporate strategy establishes a foundation for BroadBand to leverage its technical strengths to target the high-growth, $2 billion, converging loop access and data markets, while gravitating toward more independence and less reliance on video demand over an integrated platform. |
