Proxim Sells Out
June 13, 2005
The struggling Wi-Fi equipment provider has filed for bankruptcy, and will become a subsidiary of another tech company in order to get out of debt.
Beleaguered wireless equipment provider Proxim
, stung last year by losing a $22.75 million lawsuit to Symbol, announced this weekend that it would "sell substantially all assets" to Moseley Associates of Santa Barbara, Calif., for $21 million, and become a wholly-owned subsidiary.
Moseley is planning to "preserve most of Proxim operations," according to a statement. This acquisition gives it a portfolio of wireless products running from 200MHz to 38GHz radio spectrum.
Moseley is a quickly-expanding technology company that is growing through acquisitions of companies like Microwave Data Systems, Axxcelera and CarrierComm, all purchased within the last few years. Moseley president and CEO Jamal Hamdani said in a statement, "We intend to fully support all of Proxim existing customers and warranties."
This buyout follows Proxim stock plummeting in May after news broke that Proxim might seek bankruptcy protection. The company (including subsidiaries Proxim Wireless Networks and Proxim International Holdings) filed for Chapter 11 on June 11, the same day the company announced the Moseley buyout.
Proxim received notification on June 3 that it faced de-listing from NASDAQ after 30 consecutive days priced below $1 per share.
According to Unstrung.com, Proxim likely needed to raise $100 million to be completely debt-free. It owes investors $80 million "in the event of change of control or material asset sale."
The asset purchase agreement must be approved by the bankruptcy court before it can go through.
Proxim owns the ORiNOCO brand of Wi-Fi equipment which it bought from Agere Systems in 2002, and the Tsunami wide-area wireless equipment which came from a merger with Western Multiplex that same year. The company did not introduce a WLAN switch solution at the same time as competitors and startups started gaining ground, which some analysts feel was a mistake.
Proxim was at one time the number three player in corporate wireless equipment sales, right behind Cisco and Symbol, and had a share price as high as $250 in 2000. It has deals with Avaya and Motorola to provide wireless voice services to corporations, and another deal with Intel
to make Tsunami products that use WiMax.
In the first quarter of 2005, Proxim was ranked number five in WLAN revenue with only 2.9 percent of the market, according to Synergy Research Group's Q1 WLAN equipment market shares report. Stock was trading at press time at 32 cents per share.
The company has moved its headquarters from Sunnyvale, Calif. to San Jose.