With more than $3bn cash in the bank following the $430m sale of its networking business to Cabletron Systems Inc plus its settlement with Intel Corp, DEC’s management has hinted to Wall Street that it is ready to spend some of the pile on acquisitions as well as continuing to buy back its shares. Merrill Lynch & Co figures DEC may attempt to strengthen its systems integration and client-server outsourcing businesses and thinks its success with the Alta Vista search engine technology may prompt it to buy in internet software. The bank says DEC may take a gain of over $100m in the March quarter to reflect the value of the Cabletron product credits though revenue will decline by $250m as it ceases its sales through resellers. That, it says, could be partially offset by DEC OEMing a broader product line over time. Operating expenses will decline in moving 900 people to Cabletron. DEC has committed to take $1bn of products from Cabletron over the next three years. Cabletron gets 250 patents, almost all of the 900 employees – half in engineering, half of them sales and half in support.
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