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January 25, 1989


By CBR Staff Writer

AT&T Co’s agreed $250m – $10.25 a share – cash tender offer for Paradyne Corp brings the US phone giant not only a comprehensive line of modems, multiplexers and network control and management systems, but a large installed base of – mainly IBM – users, both in the US and around the world: the direct sales offices in the UK, Canada, Hong Kong and Japan, and representation in 47 other countries are seen as particularly valuable in furthering AT&T’s ambitions internationally. About 47% of Paradyne’s 1987 sales of $232m were achieved outside the US. Paradyne’s flagship product is seen as its high-speed Series 3400 modems, which enable customers to switch to digital lines without having to buy new equipment. Adding Paradyne’s base is likely to raise AT&T’s stake in the US modem market to 26%. Other Paradyne products include statistical multiplexers, T-1 multiplexers and channel extenders for IBM mainframes. Observers see substantial overlap in the AT&T and Paradyne product lines, but that seems to be less important to AT&T than the access to a large army of new customers. It has been gearing up to go head-to-head with IBM in the network management arena, adding Cincom Systems Inc’s Netmaster to its own offering to create a more complete alternative to IBM’s NetView. Paradyne employs 2,600 and has plants at its Largo, Florida headquarters, and in nearby Melbourne. It is presently the phone company’s plan that Paradyne should be merged with its own data communications operation in Montgomery, Illinois.

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