3Com is selling its carrier division, CommWorks, for $US100 million to UTStarcom, a carrier equipment provider with most of its business in China.
When the cash deal is completed sometime in the second quarter, UTStarcom hopes it will help to open doors for the company in the US, Europe, Latin America and Japan.
UTStarcom admits it has had trouble cracking these markets with its soft-switches, and broadband, wireless and 3G-access gear. However, it hopes to make inroads among CommWorks’ customers which include AT&T, Sprint, WorldCom, BellSouth, Verizon Communications, Qwest Communications International, British Telecommunications, France Telecom and Telstra.
UTStarcom will acquire all of CommWorks’ products including CDMA wireless gateways, voice over IP gateways and remote access servers, as well as CommWorks’ customer support and services businesses. It will also acquire all patents pertaining to the CommWorks equipment.
The company said that it would probably shift manufacturing to China where labour was cheaper and may redesign the product chassis to make them less expensive to produce. It would also lay off some CommWorks employees where it has overlap.
UTStarcom said that the CommWorks acquisition would bring in from $US30-$US35 million in additional revenue per quarter.
3Com said it would focus solely on enterprise equipment.