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December 10, 1997updated 03 Sep 2016 7:41pm

LUCENT ACQUIRES GIGABIT ETHERNET START-UP PROMINET FOR $200M

By CBR Staff Writer

Lucent Technologies Inc stepped up its bid (CI No 3,124) to become a player in the datacommunications market yesterday, paying around $200m of Lucent stock to acquire Prominet Corp, a Marlborough, Massachusetts -based start-up developer of gigabit ethernet LAN switch company. Lucent is looking to Layer 2/Layer 3 Gigabit Ethernet company Prominet to gain it a foothold in the still young gigabit ethernet market which has been predicted to grow to a $1bn market by the year 2000. According to Lucent, the deal reflects its belief that high- speed Ethernet will be one of the two key high performance data networking connectivity, the other being ATM. But the company believes its core telecoms companies will still be looking to ATM. Gigabit Ethernet sales, says Bill O’Shea, president of Lucent’s Data Networking Systems group, will primarily be to corporates and ISPs two markets Lucent is increasingly interested in graining ground in. Prominet only began shipping its first product, the P550 Cajun Switch for Campus Ethernet switching, two months ago. Lucent has recently set out to expand its datacoms business. In September, Lucent unveiled a range of ATM, remote access and Network management additions to its datacoms portfolio which it followed up in October with the acquisition of remote access and modem company Livingston Technologies Inc for around $650 of Lucent stock (CI No 3,269). For some time, Prominet has made no secret of being open to the possibilities of being acquired, claiming it would not look to an Initial Public Offering for some time, but said if it were approached by a buyer it would seriously consider the offer. Prominet says it is working on a faster layer 3 routing switch, due for release in January.

Lucent’s acquisition follows Cisco Systems Inc’s buy of Gigabit Ethernet player Granite Systems Inc last year (CI No 3,012) and Bay Networks Inc’s Rapid City Communications Inc acquisition earlier this year (CI No 3,186). Among the larger gigabit-ethernet start-ups yet to be snapped up by a big networking company are Foundry Networks Inc and Extreme Networks Inc. Lucent says the deal is expected to be completed by the end of the quarter ending March 31, 1998.

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