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Vyyo branches out with Xtend, T-1 product

Sun, 05/16/2004 - 8:00pm
Karen Brown

It's been a busy day over at Vyyo Inc., which announced it has reached out to grab Xtend Networks Ltd. and has debuted a new product that can bring T-1 service to cable plants.

To start with, the Palo Alto, Calif.-based broadband technology company agreed to purchase all of the shares of Xtend in a deal worth as much as $19.6 million.

Xtend, which is based in Tel Aviv, Israel and has offices in Atlanta, has developed a technology it says can pump up coax spectrum to upwards of 3 Gigahertz in the last mile of the cable plant. With an array of upconverters at the node, devices attached to each laser amplifier, splitter and downconverter at the customer premise, the Xtend technology creates an overlay path beyond the existing 750 MHz or 860 MHz coax capacity.

Xtend has been in field trials with unnamed U.S. cable operators and inked a master purchase agreement with an MSO, but no formal deals have been announced.

The acquisition deal calls for Vyyo to issue about 1.4 million shares of its common stock and 146,000 shares of its restricted common stock to finance the deal. It will also fork over a maximum $10.7 million in cash payments depending on performance criteria through 2006. The total cost of the deal is estimated to not exceed $19.6 million.

Going forward, Xtend's $3.5 million cash on hand will be enough to fund its operations through the end of the year, according to a Vyyo release.

"We believe that Xtend's technology solves bandwidth constraint problems and allows for the timely introduction by MSOs of services, such as video telephony, that require a substantial increase in available bandwidth," said David Gilo, chairman and chief executive officer of Vyyo, in a release. "These features enable cable operators to be more competitive with telecom operators and can potentially reduce subscriber churn due to satellite TV competition, thus increasing cable TV revenues."

Xtend CEO Hillel Weinstein and the existing Xtend employees will stay on with the company.

In a separate release today, Vyyo announced a new Data-Over-Cable Service Interface Specification-based product that can deliver T-1 circuit switched connections. The new product is aimed at helping cable operators expand their commercial services offerings aimed at small to medium business markets, which have traditionally been dominated by T-1 services. It may also come into play for residential cable telephony services.

The technology is now in a field test with a major unnamed U.S. cable operator, according to the company.

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