Osicom to Merge Unit With Sync Research
Santa Monica optical networking firm Osicom Technologies said Tuesday it would merge its Network Access subsidiary with Sync Research, an Irvine maker of computer networking gear.
Osicom and Sync shareholders will each own 50% of the combined company, to be called Entrada Networks. A spokesman for Sync said the new operation will be based in Irvine. There was no word on when the deal will close. No layoffs are planned.
Osicom’s Network Access subsidiary makes high-speed access devices for local and wide-area networks. The unit, based in Annapolis Junction, Md., expects to report more than $4 million in revenue for its current fiscal quarter and has 120 of Osicom’s more than 300 U.S. employees. Osicom lost $21.7 million on revenue of $68.4 million in its 2000 fiscal year, which ended Jan. 31.
Sync makes computer networking devices and has never made an annual profit since it went public in 1995. The company recently reported a 1999 net loss of $4.3 million on revenue of $18.2 million. It has 95 employees, including about 60 based in Irvine.
The two businesses have “complementary product lines, technical capabilities and sales channels,” said William Guerry, Sync’s chief executive.
The combined company will be in a stronger position to compete in new markets, such as storage area networking, Guerry said.
But investors were less enthusiastic, sending shares of both companies down in Nasdaq trading Tuesday. Sync shares fell 31 cents to close at $2.81, while Osicom shares dropped $4.50 to $46.75, a loss of nearly nearly 9%. Osicom shares, which reached a high of $149.75 on March 6, have lost more than half their value this month.
Joe Gladue, an analyst with Chapman Co. in Baltimore, attributed some of Osicom’s decline to concerns that falling prices for telecommunications stocks will delay a planned spinoff of its Sorrento Networks fiber-optic equipment unit.
Osicom has a history of controversy. In 1998, The Times reported that its chief executive, Par Chadha, had announced he was personally buying 350,000 Osicom shares without mentioning in a press release that the shares were from a large investor who wanted to sell.
In 1996, BusinessWeek reported that Osicom’s shares may have been manipulated by firms associated with organized crime without the company’s knowledge. In 1997, Barron’s alleged that Chadha was the subject of a criminal investigation in the U.S. and Britain for certain financial dealings. Osicom and Chadha disputed both stories.
*
Bloomberg News was used in compiling this report.
