
Intel
sells more non-core assets - EICON TO BUY SOME OF FIRM'S COMMUNICATIONS BUSINESSES Shedding
a relic from the tech bubble era, Intel said Wednesday that it agreed to sell
some of its communications businesses to Texas tech company Eicon Networks for
an undisclosed price. Intel sold off assets related to three businesses
it acquired during the dot-com days. The biggest part were businesses Intel acquired
when it bought Dialogic for $777 million in 1999. Other businesses sold off included
assets from Voice Technologies Group and DataKinetics, both acquired by Intel
in 2000 for undisclosed prices. This is Intel's second move to shed its
failed strategy of diversification into communications during the Internet bubble.
In June, Intel agreed to sell its mobile processor business to Marvell Technology
Group for $600 million. In all of the deals, Intel is only getting "cents
on the dollar" of its original investment, said David Wu, an analyst at Global
Crown Capital. Intel originally invested more than $10 billion in communications-related
acquisitions. But Paul Otellini, Intel chief executive, is refocusing the company
on its core PC-related chip businesses to better compete with arch rival Advanced
Micro Devices. "When you're middle-aged and you have to see a doctor,
they tell you to exercise and lose weight on a diet," Wu said. "This
is the diet part. Now they are trying to get in fighting shape." Barbara
Grimes, a spokeswoman for Santa Clara-based Intel, said the company will now focus
on three core communications businesses: network processors, which are chips used
in communications gear; modular communications, technologies and equipment used
in standard telecommunications equipment; and optical technology, which processes
data from fiber-optic networks. Grimes declined to comment on whether more
businesses are up for sale. She said the company continues with its efficiency
analysis, but declined to say if the businesses sold were profitable or not. These
"media and signaling" businesses focused on communications equipment
such as media gateways, telecommunications gear and communications software. For
example, they would take voice and other data and shape it in a way that was easier
to send over communications lines. Eicon Networks, based in Plano, Texas,
already has a media and signaling business. As part of the deal, private equity
firms Investcorp Technology Ventures and Tennenbaum Capital Partners will invest
in Eicon. "This is consistent with their efforts to streamline, and
it's surprising they hung on to these businesses so long," said Joe Byrne,
an analyst The Linley Group. "It may not be over." Most of the
600 Intel employees at the businesses sold will become part of Eicon, but some
may lose their jobs. The Intel workers are in New Jersey, New York and the United
Kingdom. The deal is expected to close in four to six weeks. |