PCTEL Sells HSP Modem BizPCTEL Sells HSP Modem Biz

PCTEL sells its HSP modem product line to Conexant in exchange for intellectual property, cash, and royalty payments; sharpens focus on wireless

May 9, 2003

3 Min Read

CHICAGO -- PCTEL, Inc. (Nasdaq:PCTI), a leading provider of Internet access products, 802.11 mobility software, and software-defined radio products announced today that it has entered into an agreement to sell its HSP modem product line to Conexant (Nasdaq: CNXT) in exchange for intellectual property, cash, and royalty payments. PCTEL will retain all rights to its strong modem portfolio, its existing licensing business, and its new Wi-Fi and wireless network measurement businesses. PCTEL also will acquire ownership of several Conexant patent families. The patents cover modem and other access technologies. Additionally, Conexant will license PCTEL's Segue(TM) Wi-Fi software for use with certain products. The agreement is subject to customary closing conditions and is expected to be completed in the next few days.

"We leveraged our intellectual property to strengthen our core businesses and commit fully to the future," said Marty Singer, PCTEL's Chairman and CEO. "What began as discussions regarding the infringement of our technology ended with the strategic exchange of assets that permits PCTEL to build upon its recent investments. We now turn our full attention to the rapid growth of our Wi-Fi and network performance initiatives and, of course, the aggressive licensing of our access technology," added Singer.

Under the terms of the transaction, Conexant will pay PCTEL approximately $19 million. Aside from the transfer of the HSP modem product line and installed base, the $19 million covers a Segue(TM) software license and royalty payments over four years. PCTEL will also obtain ownership of several Conexant patent families pertaining to modem and other access technologies. As part of the agreement, PCTEL will pay Conexant a percentage of royalties on the transferred Conexant patents after specific profit objectives have been achieved. In addition, approximately 30 employees will transfer to Conexant to ensure support of the current product line and PCTEL's existing customer base. We anticipate Silicon Laboratories (Nasdaq: SLAB) will continue to supply the silicon DAA for the PCTEL customers transitioning to Conexant.

The deal with Conexant is the latest in a series of strategic moves made by PCTEL. Since taking the helm in November, 2001, the current management team streamlined its modem operations and acquired Wi-Fi software platforms on which they built the Segue(TM) product line. Just recently, they acquired Dynamic Telecommunications Inc. (DTI) to extend their presence in wireless, emphasizing in particular the need to optimize wireless networks - cellular and local area - for data and voice traffic. Their Segue(TM) Roaming Client has been adopted by Boingo for 2.5 cellular data networks, Maritime Telecommunication Networks for Wi-Fi networks aboard cruise ships, and, now, Conexant.

The agreement settles all issues pertaining to patent infringement between the two companies. Conexant acquired a fully paid, worldwide license to practice PCTEL's modem patents. The license covers technology essential to the implementation of the V.90 standard as well as other important soft modem patents. Similarly, PCTEL is fully licensed under Conexant patents to continue its sale of DSP-based modems to its existing customers, including Texas Instruments (Nasdaq: TI), and L. M. Ericsson (Nasdaq: ERICY).

PCTEL Inc.

Conexant Systems Inc.

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