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Intel goes shopping

Flush with cash, Intel decides to buy Ethernet specialist Case Technology and invest in mobile computing company Xircom.

2 min read
Taking advantage of its spectacular growth for the year, Intel (INTC) decided to put some of its money to work, purchasing Case Technology, which specializes in Ethernet switching and routing technology, and investing in mobile computing company Xircom (XIRC).

Intel swallowed the Copenhagen, Denmark-based Case Technology for $72 million. Case Technology is a subsidiary of the London-based Anite Group. Case specializes in Ethernet switching and routing for small businesses and far-flung remote offices.

Mark Christensen, Intel's vice president of its Internet and communications group and general manager of its networking products division, characterized Case's technology as "totally complementary." He added that Case is a company that has excelled in creating strong products but has not had the wherewithal to market them. That will certainly change as the Intel machine gets rolling over the next few months.

"It's like a glove fitting a hand perfectly," Christensen said.

Intel currently does not offer a dedicated Ethernet switch. Case is currently shipping a 24-port 10MB switch with Fast Ethernet uplinks that is priced at $189 per port. They also offer a router to connect branch offices that has two WAN (wide area network) ports and one LAN (local area network) port. Christensen said the greatest synergies between the two vendors will come as Fast Ethernet switches roll out in the coming months based on Case's technology.

Intel has one switch offering shipping: an 8-port 10MB/100MB switch with an expansion option of four slots.

The first wave of products based on the acquisition should hit the market by the end of the first quarter, according to Christensen. New Fast Ethernet switching products based on Case's technology will roll out soon after, he said. Those offerings will be targeted at the workgroup sector, with high-performance and management features.

All 146 Case Technology employees will become part of Intel's networking products division. The Intel acquisition is dependent on shareholder approval from the Anite Group. Its next meeting is expected to be held by the end of next month.

In related news, Intel spent $52 million on 2.5 million shares of Xircom stock and acquired warrants to obtain an additional 1.5 million shares. The 2.5 million newly issued Xircom shares represent 12.5 percent of the company. The two companies also signed a three-year OEM agreement.

Xircom makes PC cards that connect mobile users to their corporate networks or to the Internet. The technology should fit right into Intel's bread-and-butter dominance in the PC component marketplace.

Xircom also today reported an improved first quarter performance. The company posted net income of $4.5 million, or 22 cents a share, for the period ending December 31, compared with a net loss of $760,000, or 4 cents a share, a year earlier. Revenues climbed 65 percent to $62.3 million, up from $37.7 million a year ago.

The company's stock was up over 23 percent in trading today. Shares closed at 24-1/4; they stood at 19-5/8 at yesterday's close.