Bay Networks to acquire LANcity

Bay Networks has agreed to acquire LANcity for $59 million in cash, in a bid to bring Internet access to America's almost 60 million households currently subscribing to cable television.

With the acquisition of all outstanding shares in LANcity, a pioneer in the ultra-fast yet nascent cable modem technology market, Bay Networks will position itself to offer cable operators with comprehensive Internet services. The Santa Clara, California-based internetworking company said it plans to couple LANcity hardware with Bay Networks' worldwide sales, marketing, support, and service operations.

The company hopes to carve out an early position in this potentially enormous market. While just 25,000 cable modems are in use today, the market is expected to grow to as many as two million units within the next two to four years, according to the company.

LANcity, a privately-held company based in Andover, Massachusetts, already counts several cable operators among its customers, including Continental Cablevision, Cox Cable, Time Warner, and TCI Internet Services. Bay Networks said it posted annual revenue of $2.1 billion in the last year.