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Intel hangs up on telecommunications business

Chipmaker's latest move to cut costs: selling Eicon Networks a peripheral motherboard and software operation.

Intel is shedding another peripheral business unrelated to PCs and servers in a bid to cut costs and get back to basics.

Eicon Networks announced on Wednesday that it has agreed to purchase Intel's media and signaling business, acquiring telecommunications motherboard and software products that were a fringe part of Intel's arsenal but central to Eicon's business. The deal is not material to Intel's business, according to Intel, which did not disclose financial terms.

Employees within Intel's communications businesses have been looking over their shoulders all summer following an announcement in April that the company was looking to cut costs. Earlier this year, Intel sold its XScale business to Marvell Technology Group for $600 million.

At one point, Intel had hoped to transform the telecommunications business with products based on industry standards, in a fashion similar to how it moved the server market away from RISC (reduced instruction set computer) processors running Unix.

But telecommunications carriers and equipment vendors did not make the transition as quickly as Intel had hoped, and related products never became a significant part of Intel's product lines. Intel is now looking at technologies such as WiMax as its primary investment recipients in the networking world.

Eicon, however, thinks it can straddle the line between older telecommunications technology and newer standards with the purchase of Intel's business, Nick Jensen, president and CEO of Eicon, said in an interview.

"We're living in a hybrid environment, with the old world connecting to the new world," Jensen said. Plano, Texas-based Eicon makes servers and media gateways for telecommunications applications.

The deal is expected to close in four to six weeks. Jensen said "a significant number" of Intel employees would be offered jobs with Eicon; the Intel representative said "a majority" of the 600 employees affected by the deal are expected to wind up at Eicon.