Cabletron plans to sell the Flowpoint digital subscriber line (DSL) subsidiary that it acquired in September last year to Efficient Networks in a stock swap deal valued at $1.1 billion.
At the time, Cabletron paid $25 million for the business to boost its service provider offerings. But a Cabletron spokesperson said it had now decided to sell the unit to concentrate on its core switches and routers business and because of its undervaluation.
The move has fuelled speculation that the supplier will sell off its Spectrum network management unit, however. Analysts have been expecting it to sell the business since it was spun off as a separate unit earlier this year.
And the Cabletron spokesperson confirmed: "The company is considering spinning off Spectrum and the other businesses. If they were spun off they'd represent huge value."
Under the terms of the new deal, however, Cabletron has taken a 24 per cent stake in Efficient Networks and will continue to sell the Flowpoint DSL customer premise equipment. It will also resell Efficient's range of broadband modems and routers.
Since Piyush Patel replaced founder Craig Benson as president and chief executive in June, he has said he wants to "unlock the true value" of Cabletron's businesses by setting up relationships with technology specialists.
His aim is to make Cabletron the number one or two supplier of switches and routers and to partner with third parties to boost the firm's other businesses, which comprise wireless technology, network management software and a services and support organisation.
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