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Digital sheds printer business

Digital Equipment sells its printer unit to Genicom, while rumors that it will also sell its networking business continue to spread.

Digital Equipment (DEC) has sold its printing systems business to Genicom (GECM), and rumors are swirling that the company is planning to sell off other divisions.

Digital decided to sell its printing business to concentrate on developing systems closer to its central operations, such as workstations and personal computers for business, according to Digital representatives.

As previously reported July 9 by CNET's NEWS.COM, the two companies have been in talks for some time, as part of Digital's continuing effort to find a formula to return to profitability.

Although neither company would comment on terms of today's deal, Genicom executives said they anticipate revenue from this purchase to be about $100 million annually, according to company estimates. Although Digital does not break out sales for its printer unit and related services, analysts have estimated it may reach upwards of $240 million.

The purchase now makes Genicom, a supplier of network integration, multivendor services, and printer systems, the sole provider of printing products, business planning, technical support, and distribution services to Digital.

"This gives Genicom staying power in the market," said Genicom's president and CEO Paul T. Winn.

Genicom had revenues of $73.6 million for the most recently ended quarter. Last year, Genicom bought the printer and related supplies business of Texas Instruments in a deal worth approximately $150 million, according to analyst's estimates.

Executives from both companies said they agreed to concentrate on each company's core businesses. Digital will strengthen its focus on platforms, workstations, personal computers for business, networking products, software and services, and the Internet and intranet.

"Genicom will continue to strengthen its position as a leader in midrange, client-server printing solutions," Winn said.

Jim Flanagan, vice president and general manager of Digital's former printing systems arm, said the agreement is a plus for both companies. "In looking at the long-term strategy of Digital, printers weren't core to it. It really wasn't the most effective use of our capital investment."

The deal comes amid rumors that the Massachusetts-based company also is looking to sell its computer-network equipment business.

The broad-line computer company is anxious to find a buyer for its computer-network equipment business, whole or in parts, a source close to the company said today.

"The parts of it may be shopped around a little bit," the source said. "It's sort of been talked about for a year."

The Wall Street Journal, citing people familiar with the situation, reported today that Digital has held talks about the unit's sale with Bain Capital and Lucent Technologies.

Digital sees the unit, which has estimated annual revenue of about $600 million and could fetch $500 million to $750 million, as a growing cash drain that would take a huge investment to revive, the newspaper said.

Digital representatives would not comment on the rumors. In a statement early today, Digital said that its networking business includes areas that are integral to its strategy and others that are complementary.

"In order to best meet customer and channel partner needs, we always are looking at a variety of possible relationships with other companies to optimize our network solutions for our customers," Digital said in a statement. "We will announce these relationships when they occur, if appropriate. Until that time, we cannot comment on rumor or speculation."

Reuters contributed to this report.