Wireless Firms Telaxis, YDI Merge

To better compete in the wireless connectivity market, Telaxis Communications , of South Deerfield, Mass., and Young Design Inc., of Falls Church, Va., are merging.

The deal comes three months after Telaxis' proposed merger with P-Com hit a snag because of "business and financial conditions." It was scuttled a month later.

Today's pact melds YDI's lower-frequency IEEE 802.11b , base station, customer premise equipment, and Ethernet bridge products with Telaxis' higher-frequency FiberLeap and EtherLeap products.

The combined entitity will serve a range of customers -- from low-cost, lower-capacity applications through carrier-class, high-capacity connectivity needs.

In addition to its technology assets, YDI also boasts an attractive balance sheet, producing profits since 1999. During that time, revenues jumped from $2.5 million to $20.3 million, thanks in large part to the explosion in home and small office/home office networking.

YDI stockholders will own approximately 69 percent of the combined entity and Telaxis stockholders would own approximately 31 percent.

Following the close of the deal, YDI will become a subsidiary of Telaxis. Falls Church will serve as corporate headquarters and the South Deerfield facility will be the product and technology development hub. A Sunnyvale, Calif., sales office will remain open and a Dallas office is being considered.

Robert Fitzgerald, current CEO of YDI, will serve as president and CEO of the combined entity. The company will employ about 100 people.