Proxim Inc. and Netopia Inc. said Friday that they have mutually agreed to
scrap a planned merger, citing poor market conditions. The companies said no
termination fees will be tied to that decision.
Despite ending that part of their relationship, the two will continue work on
the integration of Proxim's HomeRF-based modules into Netopia's broadband
routers and home-networking devices.
The annulment of the proposed marriage with Netopia put the finishing touches
on another tough week for Proxim and its plans involving the HomeRF wireless
platform.
Intel Corp. has confirmed that it will go with the faster 802.11b protocol
for the next generation of its 'AnyPoint' home-networking gear, which is set for
release in the third quarter. Intel uses HomeRF in the first iteration of
AnyPoint, and it plans to market it only as a 'low-cost' solution when its
802.11b products emerge.
Intel's defection to 802.11b has in part caused Proxim shares to lose about
one-half of their value since the second week of March. Proxim shares were up
almost 2 percent to $10.56 in afternoon trading Friday, however.
The decision to call off the merger could turn into a positive for Proxim,
Allied Business Intelligence Inc. vice president of residential and network
technologies Navin Sabharwal said in a research note.
That's because if the deal had gone through, Proxim would have become a
residential-gateway vendor instead of a HomeRF-module manufacturer, putting it
in the unenviable position of competing directly with its own customers,
Sabharwal noted.
Residential-gateway vendors 'are loathe to fund a competitor,' he added,
noting that the crumbled Netopia merger might make manufacturers more open to
adopting HomeRF and Proxim's technology.
