Proxim, Western Multiplex to Merge

By Clint Boulton

January 17, 2002

Proxim, a heavy HomeRF proponent that made way for 802.11 standards this past year, looks to double its might.

In a deal designed to create a great force in wireless networking, Proxim Inc. (NASDAQ:PROX) Thursday signed a agreement to merge with Western Multiplex Corp., (NASDAQ:WMUX) a supplier of point-to-point wireless Ethernet bridges.

The deal, pegged as a merger of equals, received unanimous approval from each firm's board of directors. Each outstanding share of Proxim common stock will be converted into 1.8896 shares of Western Multiplex common stock. Proxim and Western Multiplex stockholders will each own about half of the combined company if the merger goes as planned.

The new firm will keep the Proxim name and trade under the its stock ticker, as well as remain at Proxim's Sunnyvale, Calif. locale. When and if the pact is successfully iced, Proxim claims it will be one of a few companies offering end-to-end wireless networking solutions for mobile wireless backhaul, fiber extension and redundancy, enterprise wireless LAN and campus networking, last mile access and home networking. Rival Agere also offers this.

Proxim hopes to benefit from Western Multiplex's Tsunami brand, which consists of point-to-point wireless Ethernet bridges with capacity of up to 430 Mbps, as well as point-to-multipoint systems with capacity of up to 60 Mbps. It also makes wireless equipment for cellular backhaul and other telco applications under its LYNX brand, which includes T1/E1 and DS3 wireless links.

Jonathan Zakin, chairman and chief executive officer of Western Multiplex, will retain his position with the combined company. David King, Proxim's chairman and chief executive officer, will become president and chief operating officer. The company will have some 485 total employees, including 174 research and development staff.

"We are clearly excited about the ability of our two world-class companies to leverage each other's customers, sales channels, product portfolios and core technologies," said Western Multiplex's Zakin.

The transaction is expected to close during the second calendar quarter of 2002.

Cheery news for wireless networking

While Proxim and firms such as Siemens have long supported HomeRF as primary wireless networking standards, Wi-Fi, or 802.11b, has emerged as a winner to many players in the market.

According to a recent Cahners In-Stat/MDR study, shipments of Home RF did comprise some 45 percent of total wireless Local Area Network (LAN) node shipments to the home in 2000. But when the figures are tallied for 2001, Cahners believes HomeRF will only command 30 percent of the total residential WLAN market. This means the remaining 70 percent shall fall to Wi-Fi, with some 4 million Wi-Fi WLAN nodes going into the home in 2001.

But put aside the rival technologies, and you've got a positive scenario, according to InStat/MDR analyst Gemma Paulo, who said wireless networking technologies will become more and more desirable to consumers.

"The idea of being wirelessly connected to the Internet is slowly becoming flashy and sexy, at the same time boosting mobility and productivity," said Paulo.

Paulo said prices for wireless networking products will drop as demand increases.

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