PairGain Announces Intent to Sell Microelectronics Group - Company Business and Marketing

Cambridge Telcom Report, Nov 22, 1999

PairGain Technologies, Inc., Monday announced its intent to divest its microelectronics engineering development group of approximately 40 engineers. The Company is being advised on the transaction by Broadview International, and is currently in discussions with a "short list" of interested parties.

"Our move to divest the team is driven by the dramatic acceptance of DSL technologies and our plan to focus on system-level multi-service access platforms. In the short span of eight years, `DSL' has gone from being an esoteric niche technology to a household name," stated Mike Pascoe, PairGain's chief executive officer. "While the intense competition among chip design firms has reduced the need to internally develop our microelectronic devices, we believe we will maximize the value of our excellent microelectronics design capability by divesting the group to a purchaser that can leverage its talents on a much wider scale. We also intend to maintain significant benefits from the group through favorable component pricing and collaborative product development with the acquirer," he added.

PairGain's microelectronics group developed the DSL components that have been the building blocks for all of the company's HDSL, HDSL2 and ADSL products. The microelectronics team's first development was the SPAROW HDSL chip which is the core of PairGain's HiGain T1 product line. More recently, the team has completed development of the Falcon ADSL/G.lite component, as well as HDSL2 transceivers co-developed with third parties.

In connection with this decision, the Company signed a mutual release and settlement 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. This charge will be accounted for in the fourth quarter of this year.

PairGain is the leader in the design, manufacture, marketing and sale of DSL networking systems. Service providers and private network operators worldwide use PairGain's products to deploy DSL-based services such as high-speed Internet, remote LAN access and enterprise LAN extension.

For more than 10 years, PairGain has been recognized as a technology leader and industry innovator of telecommunications equipment. The Company offers the widest range of DSL-based systems available. Product lines include HiGain Solitaire HDSL2 solutions, HiGain T1/E1 access systems, PG-FlexPlus, PG-Flex and PG-Plus subscriber carrier systems, the Avidia System, Megabit Modems and Campus-HRS megabit access products. Well over 1.5 million PairGain DSL nodes are installed in over 70 countries. Additional information about the Company is available on the Internet at www.pairgain.com.