Further consolidation in the networking market increased yesterday when Ascend said it will buy Cascade for $3.7 billion. The acquisition came as Cascade said it expected less turnover and profits for the quarter ending 29 March, excluding its own takeover of Sahara Networks.
That will give remote networking solution vendor Ascend the Frame Relay and ATM technology it coveted and lacked in the past.
The deal will be accounted for by a stock share where each share of Cascade common stock will be swapped for 0.7 of an Ascend share, the company said. But the deal is not worth what it was only a few days previously. Ascend?s share price slumped by over $11 to $40.75 dollars yesterday.
Only last Thursday, its stock had risen to over $52. Current Ascend CEO Mory Ejabat will stay as president and CEO while Cascade?s Gururaj Deshpande will become an executive VP of strategic planning. Ex-Cascade CEO Dan Smith will become executive VP of the Core Switching Systems business unit.
Ascend will be restructured into four divisions: multimedia access products, remote products, access and concentrator products, and core switching systems.
Bob Dahl, chief financial officer of Ascend, said that the merged company will keep that name and the cost of the acquisition will be accounted for by a one time charge in its first quarter earnings.
Both companies said that the merger meant that the new company will be able to provide products and services from the centre to the outer reaches of the network.
Cascade and Ascend will turn in their next quarter financial results on 10 April.
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And becomes the team's executive chairman to boot