ADC sells off wireless and access divisions
The sale comes on the heels of the sale of ADC's Broadband Communications Division to C-Cor.net for $32m, a deal that is expected to close this month.
The units affected in the latest deal include ATM access concentrators and multiplexers, service delivery units (ServicePoint), and data service units/channel service units (DataSmart/FrameVision), as well as broadband wireless access systems (Axity) and broadcast television transmission systems. Approximately 350 employees will be affected by the sale, which also includes facilities in Portland, Ore, and McMurray, Pa.
Though terms of the agreement were not made public, the transaction is expected to close at the end of August, with the proceeds going to shore up ADC's financial position.
That position has come under scrutiny of late, culminating with the recent announcement of third-quarter pro forma losses by the company of $0.05 per share, which is the low end of its previously- stated guidance for the quarter ending July 31, 2001.
As a result of those losses, the company has vocalised an overall mission to reduce its operating expenses by an additional $50m per quarter ($200m annualised) through actions to be implemented beginning in its fiscal fourth quarter (which ends Oct 31) Hence the sale of the two divisions to Platinum. The company plans additional spending cuts, workforce reductions and the consolidation or closure of certain facilities. All told, the company expects to reduce its annual operating expenses by up to $450m.
The workforce reductions will include the elimination of approximately 2,500 position in addition to 7,000 positions that the company has eliminated through voluntary and involuntary reductions since November 2000. Facilities closed or with curtailed operations include those in Copenhagen, Denmark, and El Paso, Texas. The company has also halted construction and development of manufacturing facilities in Shakopee, Minn; Juarez, Mexico; and Glenrothes, Scotland.
The sale of the Broadband Wireless Group, which has long been rumored to be suffering financially - along with many in the fixed-wireless access arena - puts an end to rumors of employees "jumping a sinking ship." The division suffered alongside Nortel's fixed wireless division, which recently shut down completely, as have others.
The Access Products Division, formerly known as the Kentrox division within ADC, manufactures and sells high-speed wide-area network (WAN) access devices that sit at the access point, or edge of the enterprise network. Both service providers and business users worldwide purchase these products. The product line includes its flagship ServicePoint service delivery platform, the AAC ATM Access Concentrators and the DataSmart DSU/CSUs. The ServicePoint, introduced in 1999, is considered a breakthrough in networking innovation that enables network managers to ensure the delivery of mission-critical application performance, while at the same time controlling their WAN resources and costs.
The integration effort of APD and BWG into Platinum Equity will be led by Platinum's vice president of business integration, David Alfonso. "We see tremendous opportunity with the addition of APD and BWG to our portfolio of technology-driven companies," said Alfonso. "With strong management, a talented work force and best-of-breed technology, we believe that both companies are poised for growth and, operating as stand-alone entities, will continue advancing on the fundamentals that have been the cornerstone of their success."
The acquisition of these two divisions will mark Platinum Equity's sixth transaction this year, having acquired businesses from Motorola, McKessonHBOC, Williams Companies, Staples and Centura. The company is ranked among the United States' largest and fastest growing private companies.
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