PairGain sells chip design group, take $2.5 million charge

PairGain Technologies, Inc. (Nasdaq: PAIR) said Monday it will sell its microelectronics design group of about 40 engineers, and take a charge of $2.5 million in the fourth quarter associated with the move.

PairGain, which makes DSL networking systems, was up 3/8 to 15 3/16. The company is being advised on the transaction by Broadview International, and is currently in discussions with a "short list" of interested parties. Shares have been rising slowly since September when the company announced it would see a slow third quarter ahead.

The move is being driven by the dramatic acceptance of DSL technologies and PairGain's plan to focus on system-level multi-service access platforms, the company said in a press release. Meanwhile, it will maintain favorable component pricing and collaborative product development with the acquirer, PairGain said.

In connection with the decision, PairGain said it signed an agreement with a third party to terminate a memorandum of understanding for a joint technology development. In consideration of the settlement, the company agreed to pay $2.5 million to the third party. The charge will be accounted for in the fourth quarter.