Global Village Communication Inc., which has specialized in making communications gear for the Macintosh, has given in to industry competition and sold its modem business to a rival. The company said it will rename itself and focus on a new business: making networking equipment for small and medium businesses.
Under the terms of Tuesday's US$10 million sale, Boca Research Inc. will receive Global Village's brand name, modem technology, distribution agreements, and about 60 employees. Global Village's modem business accounted for almost all of its $90.2 million in revenue for the fiscal year ended 31 March 1997.
Boca Research also will receive a warrant to purchase up to 425,000 shares of Global Village's common stock.
Global Village, which has not yet taken a new name, said it expects to fire about 25 employees in the restructuring and take a $400,000 charge to cover the costs. The acquisition is expected to be completed by June, the companies said.
Global Village will concentrate on its One World communication servers, a line of products that let small offices set up small computer networks for email and Internet access. The company said it will use the money from the transaction to fund development of similar product lines.
The new products and a sales strategy will be introduced later this year, Global Village said.
Global Village had reported erratic financial results and two big annual losses in the past five years, mostly due to the sharp decline in Macintosh sales. Because of its small size, it also could not compete effectively in recent quarters with much bigger rivals, such as 3Com Corp.
Boca Research said the acquisition will increase its manufacturing capacity, lower its costs, increase its market share, and help the company enter what it called the "solid" Macintosh market.
Global Village's stock fell $1.06 today to $1.38 as Boca Research added 12.5 cents to close at $5.63.
