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Technology Stocks : RadiSys Corp -- Ignore unavailable to you. Want to Upgrade?

To: dylan murphy who wrote (1366)	5/25/1999 12:17:00 PM
From: bythepark	Read Replies (1) \| Respond to of 1472

Dylan, Today's Oregonian has a very complete article about the RSYS/TEXM merger. <http://oregonlive.com/business/99/05/bz052502.html> If CEO Myers is successful in building us into a billion dollar company that will be 2/3 telecom oriented, we long term shareholders are certainly going to continue to be very happy folks :) --alan > RadiSys acquires Texas Micro > The $115 million deal let's the Hillsboro maker of industrial computers > greatly increase its base in telecommunications > Tuesday, May 25, 1999 > By Su-jin Yim of The Oregonian staff > > RadiSys Corp., which makes industrial computers that run anything from > bar-code scanners to telecommunications network equipment, narrowed its > corporate focus Monday with a $115 million acquisition. > The purchase of Houston-based Texas Micro Inc. will significantly increase > RadiSys' footprint in the rapidly growing telecommunications market. The > deal will beef up RadiSys' telecommunications offerings by allowing it to > leverage Texas Micro's expertise and customer base. > > "It's all part of the road map . . . in getting a very complete set of > building blocks and subsystems for the communications industry," said Glen > Myers, RadiSys chairman and chief executive officer. > Telecommunications has become a key market for the Hillsboro company as > businesses of all types clamor for more communications capabilities, > including Internet access and wireless services. > > By 2000, supplying the components for telecommunications equipment could > make up as much as two-thirds of RadiSys' revenue, Myers said. It now makes > up about half its revenue. > > The purchase fits in with a larger growth strategy at RadiSys to carve out > its corner of the telecommunications market through making acquisitions, > building internal growth and targeting high-growth markets. The company's > stated goal is to become the first in its industry to exceed $1 billion in > revenue. > In March, the company bought IBM Corp.'s ARTIC communications division for > $22.8 million. ARTIC develops communications hardware for networking and > other telecommunications equipment. Monday's deal puts RadiSys head to head > with Motorola Inc., which has a business unit focused on the high-flying > telecommunications industry and is the dominant player in the market. > > RadiSys' acquisition pace should slow a bit with Monday's deal, which is > the largest purchase ever for RadiSys. It will take about a year to > integrate Texas Micro into the company. Still, the deal is expected to > contribute to RadiSys' earnings in 2000, if not sooner, analysts said. The > deal, which is a stock transaction, should close in three months. RadiSys > will pay the equivalent of $8 in stock for each Texas Micro share, > depending on certain conditions. > > The Houston company will become a wholly owned subsidiary called RadiSys > Communications Platform Division. The companies will combine their global > sales forces but do not expect any loss of jobs, Myers said. Radisys > employs about 470 workers worldwide. Texas Micro employs about 380 workers. > Instead, both companies plan to hire workers as they hone in on the > fast-growing telecommunications business, which will expand to more than 50 > percent of revenue once the companies combine, Myers said. > > The new company, with its combined revenue of at least $225 million and > Texas Micro's strong customer base, should win RadiSys better access to > larger customers, such as Nortel Networks, said securities analyst Dave > Duley of Black & Co. Texas Micro already has contracts with Lucent > Technologies Inc. "It gives them a very large customer in Lucent that > would take them a couple years to penetrate," Duley said. "They buy this > company, and they're five years down the road of the experience curve with > Lucent." Hitting $1 billion in revenues is a feasible goal for RadiSys, > which will nearly double its employee base with the Texas Micro > acquisition, Duley said. "It's a very large market that's very > fragmented," Duley said. "The larger you get, the more different customers > you can potentially touch with your services." > > RadiSys is paying a fair price for the 24-year-old company, said securities > analyst Tom Carley of D.A. Davidson. "They're not stealing this company > from any standpoint," he said. > RadiSys shares closed at $31, down $3. Texas Micro shares closed at $6.125, > up $1.25. > Su-jin Yim can be reached at 503-294-7611 or by e-mail at > suyim@news.oregonian.com