Silicon Valley sources claim Compaq will pull out of negotiations to buy Shiva because it has acquired another remote access supplier, Microcom, as it carries out its plan to diversify into networking.
A Shiva insider claimed Compaq was considering buying Shiva until it plumped for Microcom. ?This company is desperate to be bought and I also hear Ascend was considering it last year, before it went for Cascade.?
He said Shiva chairman and CEO Frank Ingari is under severe pressure from shareholders. Two weeks ago the company warned it will not meet analysts? expectations for its Q1 results to March 29 and CFO Cynthia Deysher resigned (see News, April 1). ?The word is that Compaq has been waiting until the shares hit their lowest point,? he said. ?But they may have lost patience.? Shiva and Compaq representative John Sweney refused to comment.
Compaq made a bid to buy Shiva?s rival in remote access products, Microcom, for $280 million last week, making it a newly-formed communications subsidiary. Lew Bergins will continue to run Microcom as president of the subsidiary.
CEO Eckhard Pfeiffer said Compaq intends to expand its business through networking, using its vast financial muscle to buy its way in. Senior VP Alan Lutz said Compaq wants 15 per cent of the remote access market but revised that figure to 25 per cent after the Microcom buy. He said Microcom is the first in ?a string of pearls? that Compaq will add to its communications subsidiary. Pfeiffer said: ?We will provide complete solutions. We will do for the network what we did for the PC in the 1980s.?
The deal marks further consolidation in the networking industry, as giant companies swallow smaller ones to acquire technology rights. The major forces in networking, including 3Com, Ascend, Bay Networks, Cabletron and Cisco, have grown rapidly and acquired in recent months to keep up.
Cash-rich Compaq was also negotiating with direct PC marketer Micron Electronics before it took over Microcom. The company has stated it will acquire and grow to catch up with bigger hardware rivals Fujitsu, Hewlett-Packard, IBM and NEC. It began the process in 1995 when it bought networking companies Networth and Thomas Conrad.
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