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Terayon Exits DOCSIS Business to Focus on Video

In a logical move, Terayon Communication Systems Inc. announced a restructuring yesterday to focus solely on its CherryPicker digital video products, repositioning the company as a 'pure-play video business.' Although Terayon was one of the first suppliers of cable modem products, the company's position in the segment has deteriorated over the last few years in the face of intense competitive pressure. Shortly after taking the helm at Terayon, CEO Jerry Chase led the charge to dump the company's struggling CMTS business in October 2004. A wise move, by the way. Now the other shoe has dropped. Terayon says it is 'reviewing strategic alternatives for its Home Access Solutions product line' and expects to record a record a modest charge of $0.6 in restructuring costs, mostly in the first quarter of 2006. As a video infrastructure pure play, Terayon will be able to generate better product margins, and potentially, its long-sought goal of profitability. The company also becomes a cleaner takeover target. Giants like Cisco or Alcatel could find Terayon's CherryPicker digital video processing products to be an attractive addition to their digital and IPTV infrastructure solutions for MSOs and telcos.
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