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Proxim falls after Intel changes camps

The company's shares plummet 40 percent after Intel announces it no longer plans to support a wireless technology backed by Proxim.

Proxim's shares plummeted 40 percent Wednesday after Intel announced it no longer plans to support a wireless technology backed by Proxim.

The wireless networking company's stock fell $5.88 to close at $9 as 16.5 million shares exchanged hands.

As reported earlier, Intel has changed its tune on what consumers should use to communicate wirelessly in their homes.

In a conference call with analysts Wednesday afternoon, Proxim Chief Executive David King said the company can weather the potential loss in revenue from Intel. Proxim makes money by licensing and supplying HomeRF technology to other companies, he said.

Along with Motorola and Siemens, telecommunications service providers and other companies have recently joined HomeRF, King said.

"The future of HomeRF...is bright. We'll overcome the potential loss (of revenue from Intel) in the second half of this year with other partnerships," King said.

Intel, one of the first companies to sell technology that allows consumers to wirelessly connect their home computers to the Net, previously backed the wireless HomeRF standard supported by Compaq Computer, Motorola, Proxim, Siemens and others.

In its next-generation wireless products for the home, Intel plans to support Wi-Fi, or 802.11B, a wireless standard backed by Apple Computer, Cisco Systems, 3Com, Lucent Technologies and dozens of others.

The tech companies sell wireless networking products that allow laptop users to roam around the house and surf the Web. They allow consumers to connect all their computers, printers and peripherals and share the same Net connection.

Analysts say the switch in allegiance by Intel gives Wi-Fi an edge in the battle to settle on a technology standard in the home. Analysts had previously predicted that Wi-Fi stands a better chance of becoming the standard in the home because it's the standard used in businesses as well. Wi-Fi also has data transfer rates that are about five times faster than the current version of the HomeRF standard.

For Proxim, HomeRF wireless networking kits are just one product in a family aimed at homes and businesses. The company supports multiple standards, including Wi-Fi.

Proxim in January reported fourth-quarter net income of $4.9 million, or 17 cents per share, on revenue of $33.6 million.

Intel plans to continue selling its existing HomeRF products. Its next-generation wireless networking kits using the Wi-Fi standard are expected to ship as early as July, Intel executives said.