2 High-Tech Giants Make Move Into Networking : Computers: In separate deals, Microsoft and Compaq are to acquire companies that will help link mainframes, PCs.
Microsoft Corp. and Compaq Computer Corp. both made investments Monday in networking companies, as the personal computer industry realizes the stand-alone personal computer is a thing of the past.
Compaq, the nation’s largest PC-maker, is making a major push in developing servers to connect PCs on a network. It said it agreed to buy NetWorth Inc., a maker of network switches and hubs, for $372 million.
Microsoft, the world’s largest software company, announced a pact to buy Netwise Inc., a developer of software that will connect Windows NT operating system software to mainframe computers. Terms of the acquisition were not disclosed.
“The desktop paradigm is breaking down and the network is indeed the computer,” said Roxane Googin of Gruntal & Co.
Googin was referring to a mantra of Sun Microsystems Inc.’s chief executive, Scott McNealy, who has been saying for years that the network is the computer, rather than a stand-alone machine.
“The leaders of the stand-alone PC are bowing to the new paradigm,” Googin said. “Microsoft is the king of the desktop and the desktop has to be connected.”
Founded in 1985 and based in Irving, Tex., and San Jose, Calif., NetWorth develops, manufactures and supplies equipment used to connect computers in networks. It had sales of $55 million in its last fiscal year.
Compaq had sales of nearly $10.9 billion last year.
NetWorth stock jumped $6.875 to close at $41.375 on Nasdaq, while Compaq shares lost $1.875 to $54.625 on the New York Stock Exchange.
Analysts said Compaq’s deal completes the strategy it put in place last month when it agreed to buy Thomas-Conrad Corp., a maker of equipment for linking computers into networks.
“We think it’s very positive strategically,” said John Maxwell, a SoundView Financial Group analyst. “It not only gives Compaq the ability to provide what we call a ‘LAN in a can,’ but it extends and leverages their manufacturing opportunity,” Maxwell added. Because of recent deals, Compaq now has the ability to provide all the elements of a local area network, or LAN, that link PCs together.
In June, Compaq signed a pact with Cisco Systems Inc. to integrate Cisco’s internetwork operating system software into future products.
Compaq Chief Executive Eckhard Pfeiffer said recently that he expects to see computer networks spanning from offices to homes.
Microsoft said the acquisition of Netwise will allow customers to maintain their mainframe computer databases but connect with the Windows NT operating system, used in corporate computers.
“Customers will gain tremendous benefits in product functionality and inter-operability from the combination of Microsoft and Netwise products, as well as an assurance that their existing investments in technology will be protected,” said Joe Broderick, president and chief operating officer of Netwise.
Microsoft stock ended down $2.125 at $97.375 on Nasdaq.
