Cabletron Buys Digital Unit
Nov. 25, 1997
MAYNARD, Mass. (AP) _ Cabletron Systems Inc. said today it was buying Digital Equipment Corp.'s network products unit for $430 million in a pact that will boost Cabletron's business by as much as a third.
The agreement, which must be approved by federal regulators, also includes commitments for Cabletron to make networking products under the Digital label and for DEC to market Cabletron-brand products through its sales network. Financial details were not disclosed.
The sale of its Network Product Business gives Digital cash and sheds a unit some viewed as a money drain. Cabletron spokesman Darren Orzechowski said the acquisition would immediately add $350 million to $375 million to its $1.5 billion in annual revenue. Digital spokeswoman Gail Smart said the unit's annual revenue was about $500 million.
More than half of the unit's business is overseas.
Cabletron said the purchase would raise its international revenue by 35 percent to 40 percent. It also significantly increases Cabletron's presence among Internet service providers.
Based in Rochester, N.H., Cabletron makes switches, routers, hubs and other computer networking products. About 4,000 of its 6,800 workers are in New Hampshire.
With about $13 billion a year in sales, Digital is the world's fourth-largest computer manufacturer. It sells and services computer systems that cater mostly to corporate and other high-end users.
Last month, Digital announced the sale of its semiconductor manufacturing operations to Intel Corp. as part of a $1.5 billion settlement of a lawsuit in which DEC accused Intel of stealing its chip technology.
Cabletron stock was down 18 3/4 cents to $24.56 1/4 in early trading on the New York Stock Exchange. Digital stock was down 43 3/4 cents at $49.37 1/2.