The aim of 3Com Corp’s $245m takeover of OnStream Networks Inc (CI No 3,017) – just as with Cisco Systems Inc’s acquisition of StrataCom Inc – is to acquire broadband technology and expertise for the provision of end-to-end Asynchronous Transfer Mode systems. The company’s products include the CLstream line of ATM access systems. Product overlap between the two companies is minimal, according to 3Com. Bob Finnochio, the company’s president, said that integration of the two would be straight forward. You will see us integrating their network management into Transcend network management, smaller versions of CLstream – and bigger ones, depending on market demand, he said. You will see their technology included in our chassis switching products. OnStream will become the Broadband Access Division of 3Com’s wide area network operations, and all staff will be transferred. The sales force will be integrated with the rest of the division and James Mongellio, OnStream chief executive and president, will become a 3Com vice-president and general manager reporting to senior vice-president Jim Olson. OnStream has some 100 employees, and revenue of between $10m and $15m. Finnochio conceded that this was a relatively small revenue, but denied that $245m was a high price to pay for the firm. We’re not buying it for the existing revenue stream; most of that is on older products, and it’s the newer technologies that we’re interested in, he said. We have very aggressive plans for this business, and as a result we believe it is worth the price.
