Intel has bought intellectual property and assets from ailing networking company Olicom that will result in the transfer of around 220 staff to the chip giant.
Olicom said the deal is aimed at avoiding a "very critical financial situation." It is the latest stage in Olicom's last resort strategy of selling off its business units one by one.
During 1999, the Danish company said its token ring business had been hit by a dramatic and accelerating decline in sales and as a consequence it had incurred severe operating losses. This resulted in its sale, at the end of this month, to Madge Networks. (see Newswire 31 August)
Olicom said that it has considered a range of further possibilities to aid its financial situation including entering into strategic alliances focussed on Fast Ethernet technology and the sale of the entire company to a third party. However, since these efforts have been fruitless, it decided to dispose of its assets and activities one by one.
Following the deal with Intel, Olicom's development employees based in Copenhagen, Denmark and Poland will become employees of Intel, which will more than double the number of Intel developers working on network systems products in Europe. It will also create Intel's first development site in Poland.
Intel has also purchased certain intellectual property and assets associated with Olicom's networking development group. Further details have not yet been disclosed.
Although the deals with Madge and Intel have contributed to improving Olicom's cash position, the company said "very significant" operational losses and very substantial asset write downs, and other charges associated with its restructuring efforts to date have reduced the book value of its equity close to zero.
Following the announced disposals to Intel and Madge, the company's principal asset will be its controlling equity in mobile voice processing business Digianswer, which it is currently negotiating to sell.
Olicom said it plans to announce its second quarter and first half 1999 results, along with a more detailed review of its financial position at the end of this month, along with an extraordinary meeting of shareholders to decide on the company's future.
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