Intel continues reorg, carves out media, signaling business

August 10, 2006 – In the latest move to chop away at its structure and refocus on core businesses, Intel Corp. has sold the assets of its media and signaling business to Eicon Networks Corp. for an undisclosed amount. The transaction is expected to close within six weeks pending regulatory approval.

The deal includes all of the Dialogic computer telephony product lines, which Intel acquired in mid-1999 for about $780 million, as well as host media processing (HMP) software and HMP-enabled blades, and SS7, PBX integration and gateway solutions. Intel’s media and signaling business includes approximately 600 employees involved in a variety of functions, including engineering, product testing and validation, operations and marketing. Not part of the sale are Intel’s communications infrastructure products for telecom equipment manufacturers, including the Advanced Telecom Computing Architecture (ATCA) blades and carrier-grade rack mount servers, and its CompactPCI compute blades and chassis.

Anthony Neal-Graves, GM of Intel’s modular communications platform division, noted that the sale is part of Intel’s plan to focus on market segments that are aligned with its core businesses, though he noted that the media and signaling business “continues to present an attractive market opportunity, and these products will continue to be an important part of the Intel ecosystem.”

Eicon believes the technologies will enhance its own Diva Server product line. Concurrent with the purchase, the company also is receiving backing investments from Investcorp Technology Ventures, as well as a credit facility from Tennenbaum Capital Partners. “Eicon’s and Intel’s media and signaling products complement each other well. We expect this acquisition to extend our global reach with solutions for both traditional circuit switch communication technology and leading-edge IP platforms for both enterprises and service providers,” stated Nick Jensen, Eicon Networks’ president and CEO.

In July, after weeks of rumors, Intel sold its communications and applications processor business to Marvell Technology Group Ltd. for $600 million in cash, in an effort to refocus investments in other areas. The unit develops processors for handheld devices based on Intel’s XScale technology, including the PXA9xx “Hermon” chip for RIM’s Blackberry 8700 device, as well as the PXa27x “Bulverde” chip used in the Palm Treo smart phone, Motorola Q, and other devices. Together, the two money-losing units posted sales of roughly $400 million last year, about 4% of total company revenues. Intel also recently announced it would lay off 1000 managers, and has reduced 2006 projections for sales, profits, and capital spending.


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