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Good times, bad times, good times again

Fri, 11/30/2001 - 7:00pm
Jeff Baumgartner

Google Factor: 3,370

Give Terayon Communications some credit. It has managed to survive and move forward in good times and in bad.

First the bad: In the first half of last year, Terayon was peppered with lawsuits alleging the company made false claims about the inclusion of its proprietary S-CDMA (synchronous code-division multiple access) technology in an erroneous CableLabs specification called DOCSIS 1.2.

That provoked a dustup at CableLabs, which ordered Terayon to cease-and-desist on that front. CableLabs later softened that stance, noting that Terayon's statements were "more a matter of interpretation." Still, the damage was done, as Terayon's high-flying stock, which was once hovering close to $300 per share, spiraled to earth. A round of layoffs in January 2001 only exacerbated a rather austere outlook for the Santa Clara, Calif.-based company.

Now the good: Terayon declared 2001 "a year of transition and rebuilding," and so far the company has appeared to match those expectations.

For starters, Terayon's S-CDMA technology won validation this fall when CableLabs announced it would incorporate the technology (alongside standards-based A-TDMA) in the forthcoming DOCSIS 2.0 specification. In the wake of that, Terayon officials also claimed that its experience with S-CDMA would give it a leg up on other cable modem and cable modem termination system vendors for a time. Those competitors, of course, vehemently disagree with Terayon's assumption.

Along those same lines, another advantage is Terayon's ability to develop and make its own silicon, including chipsets that incorporate S-CDMA. In October, Terayon spun off Imedia Semiconductor, which, of course, counts Terayon as its first customer. Imedia also plans to seek OEM partnerships with other cable modem and CMTS manufacturers. In the interim, the real trick for Imedia, which already offers headend and cable modem chipsets, will be its ability to establish independence from Terayon.

The Imedia name is also linked to another key Terayon holding. Terayon acquired CherryPicker, a digital grooming and splicing system, in 1999 when it forked over $100 million for Imedia Corp. Cherry Picker is expected to play a prominent role as the cable industry continues work on digital insertion standards.

Although Terayon today relies on its reselling relationship with Riverstone Networks for CMTS equipment, that changed dramatically in November when it launched the "BW 3500" and "BW 3200" DOCSIS 2.0-based CMTSs that house silicon from–you guessed it–Imedia Semiconductor.

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