January 14, 2003 2:40 PM PST

Intel to sell communications unit

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Intel plans to sell off the assets of its Trillium Digital Systems division, a unit that makes software for communications markets including IP telephony, wireless and broadband, the chip giant said this week.

The deal marks another divestiture by Intel of assets purchased during a giant spree of communications-company acquisitions, which started several years back and was designed to move the chipmaker beyond the PC market.

Intel will sell the majority of the Trillium assets to Continuous Computing Corp. of San Diego, Calif., for an undisclosed sum.

Intel acquired Trillium for $300 million in cash and stock during the summer of 2000 as part of a buyout spree that began in 1998. The spree included more than 35 purchases, with more than $11 billion changing hands, but some of the efforts resulting from the acquisitions have failed to pan out.

Intel recently spun off its Network Systems Group, for example. The group, which consisted of Shiva, a VPN (virtual private network) software company that Intel acquired in 1998, went to Simple Access of Newton, Mass. According to published reports, Intel also sold off Ziatech, an acquisition that had made up part of its Communications Platform Division.

Since the simultaneous PC market and telecommunications downturns began in 2001, Intel has adopted a cost-cutting and back-to-basics approach designed to hone its focus on its chip products. The company has sold or discontinued a number of operations, including its Connected Products Division, which made PC peripherals like digital cameras, and its Software Products and Services Division, which was mainly responsible for selling Intel's LANDesk management software for PCs.

An Intel representative confirmed the Trillium deal and said it was part of an effort to refocus its energy on chip-related products.

Underscoring that point, the representative said Intel will retain Trillium's professional services component, which is involved in helping Intel customers design products around the chipmaker's IXA network processor product line.


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