Intel to take over Olicom's development group

Intel to take over Olicom's development group

US chip giant Intel will absorb the development group of networking equipment maker Olicom A/S, Olicom announced yesterday. The move continues the planned sell-off of Olicom's assets amid deep financial losses at the Danish company.

The two companies have signed an agreement that will give Intel a group of around 220 Olicom staff based in Copenhagen and Gdansk, Poland, Olicom said in a statement released yesterday.

In addition, Intel will also buy intellectual property and other assets related to the Danish company's development group. Financial terms of the deal were not disclosed.

Taking on the Olicom staff will more than double the current number of European developers working on network systems products at Intel, Olicom said. The deal will give the US chip giant its first Polish development site, the company said.

Intel this year has steadily expanded its presence in the networking market largely through acquisitions. In March, Intel bought Level One Communications, a maker of telecom and networking connectivity products, for $US2.2 billion.

Yesterday's news follows Olicom's announcement late last month that it will sell its token ring operations to a unit of Madge Networks for $US15 million in cash.

The Danish company also said yesterday in a separate statement that it plans to offload its majority holding in local wireless communications technology provider Digianswer A/S, which it acquired in the first quarter of this year. One of Digianswer's main areas of focus is in the development wireless communication technology known as Bluetooth.

Olicom this year has been hit by serious losses stemming from a steep decline in sales of its token ring products, the vendor said.

Olicom opted to sell off its assets one by one after a plan to form a Fast Ethernet alliance failed and attempts to sell off the company as a whole met with no success, the company added.

Even after the recent sell-offs, the book value of Olicom's equity is close to zero, the company said. Olicom hopes the disposal of its Digianswer shares will improve that situation, the Danish vendor said. Olicom is in talks with third parties concerning the sale of the Digianswer shares, the company added.

Olicom's postponed second-quarter 1999 results are expected on September 30. At that time, the company will also provide further details on its financial situation. An extraordinary meeting of Olicom shareholders will be called in coming months to determine the company's future.

For the first quarter ending on March 31, the Danish company reported a net loss of $US5.8 million on net sales of $US37.1 million compared to a net profit of $US4.6 million on net sales of $US59.7 million for the same quarter a year ago.

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