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EXHIBIT 99.1
Conexant Editorial contact: Conexant Investor Relations contact:
Roman Kichorowsky Thomas Schiller
Conexant Systems, Inc. Conexant Systems, Inc.
508-621-0657 949-483-CNXT (2698)
[email protected] [email protected]
HotRail Editorial Contact:
Michelle Belusar
HotRail, Inc.
408-467-4463
[email protected]
CONEXANT TO ACQUIRE HOTRAIL, A HIGH-SPEED SWITCH FABRIC
AND INTERCONNECT TECHNOLOGY INNOVATOR
Scalable Terabit Switch Fabric And Multi-Gigabit Backplane Channel Technology
To Enhance Conexant's Broadband Networking Solutions For
Internet Infrastructure Equipment
Newport Beach, Calif., June 27, 2000 - Conexant Systems, Inc. (NASDAQ: CNXT),
announced today that it is acquiring privately held HotRail(TM) Inc., of San
Jose, Calif. HotRail's high-speed switch fabric and backplane channel technology
will enable Conexant to deliver complete system solutions for next-generation
Internet infrastructure equipment, including multi-terabit routers, asynchronous
transfer mode (ATM)/Internet protocol (IP) switches, gigabit Ethernet switches
and optical networking equipment.
HotRail pioneered integrated complementary metal oxide semiconductor (CMOS)
high-speed switching and interconnectivity solutions for the Internet
infrastructure and brings important switch fabric technology and innovative
multi-gigabit transceivers to Conexant's Network Access Division. Conexant's
product portfolio will now span a complete array of networking system
components, from physical layer line interfaces to network processors to switch
fabrics.
Highly-integrated switch fabrics and high-speed backplane channel transceivers
are essential for the demanding performance requirements of multi-terabit
routers and optical switches in development today. HotRail's proven backplane
channel technology is designed to enable a new breed of networking systems by
eliminating data-flow bottlenecks for greatly increased performance.
HotRail will become part of Conexant's Broadband Internetworking Systems (BIS),
a newly formed business unit within the company's Network Access Division. BIS
focuses on the burgeoning market of semiconductor solutions for the
sophisticated information processing required by emerging broadband networking
services such as high-speed Internet access, voice over IP, virtual private
networks and next-generation wireless voice/data services.
"With the increasing complexity of communications equipment for the Internet
infrastructure, our customers are looking for comprehensive, robust and
innovative solutions from their key suppliers. Today's acquisition of HotRail
will allow us to accelerate our strategy of delivering the complete silicon
solutions that our customers require," said Dwight W. Decker, chairman and chief
executive officer of Conexant.
"In the past six months, we have acquired Maker Communications for its network
processors and software, Microcosm for its optical transceivers and Applied
Telecom for its telecommunications systems software. With the addition of
HotRail's innovative switching and interconnect technology to our comprehensive
portfolio of semiconductor products, we now offer the major components of a
total networking system solution."
"We are very pleased to be combining forces with a market leader that has the
product breadth, geographical scope and stellar customer base of Conexant," said
Daniel Fu, founder and chief technology officer of HotRail Inc. "This merger
gives HotRail the opportunity to influence the development of pioneering
high-speed networking systems that will define the next-generation Internet in a
way we could not have done on our own."
"We are very excited about the opportunity we now have to combine HotRail's
switch fabric and backplane channel technology with our network processors and
physical layer devices into powerful, integrated broadband solutions," said
William N. Giudice, vice president and general
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manager of Conexant's Broadband Internetworking Systems. "Our customers need
these key components to design the new high-capacity equipment that will
transform the Internet and the way we use it."
HotRail is developing highly-scalable switch fabrics with integrated,
multi-gigabit CMOS interconnects that enhance the development of fast,
sophisticated network switching systems. These switch fabrics will be among the
fastest commercially available devices, offering up to 256 Gbps switching
capacity in a single chip. The switch fabrics in development use the company's
HotRail Channel(TM) and SkyRail Link(TM) transceivers, sampling now. HotRail
Channel is a scalable parallel CMOS transceiver providing bandwidth of 16 Gbps
full duplex for chip-to-chip and board-to-board interconnect. SkyRail Link is a
3.125 Gbps serial CMOS transceiver that supports Fibre Channel, InfiniBand(TM),
and Gigabit Ethernet standards. Four SkyRail Link chips can be bundled to
achieve point-to-point 10 Gbps Ethernet connectivity.
Conexant will acquire HotRail in an all-stock transaction for 7.8 million shares
of Conexant stock. At Conexant's closing stock price on Monday, June 26, 2000,
the transaction is valued at approximately $400 million. This transaction will
utilize the purchase method of accounting, and is expected to be dilutive for
approximately 18 months from the time of the transaction close as calculated on
a cash basis, before one-time charges and goodwill amortization. The transaction
is expected to close later this week.
Note To Analysts and Editors
Conexant will conduct a telephone conference today at 5:30 p.m. EDT. The dial-in
number is (800) 680-9685 for domestic callers and (334) 260-2557 for
international callers; the security code is "Conexant". A recorded playback of
the teleconference will be available for 48 hours after the conclusion of the
call. To access the playback, call (800) 858-5309 (domestic) or (334) 260-0890
(international); the access code is 40313, and the pass code is 16809.
Safe Harbor Statement
This press release contains statements relating to future results of the company
(including certain projections and business trends) that are "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those projected as a result of certain
risks and uncertainties. These risks and uncertainties include, but are not
limited to: risks that the contemplated transaction might not occur in a timely
manner or at all; risks relating to the integration of the technologies,
personnel and businesses of the company and HotRail; global and market
conditions, including, but not limited to, the cyclical nature of the
semiconductor industry and the markets addressed by the company's and its
customers' products; demand for and market acceptance of new and existing
products; successful development of new products; the timing of new product
introductions; the availability and extent of utilization of manufacturing
capacity; pricing pressures and other competitive factors; changes in product
mix; fluctuations in manufacturing yields; product obsolescence; the ability to
develop and implement new technologies and to obtain protection for the related
intellectual property; the successful implementation of the company's
diversification strategy; labor relations of the company, its customers and
suppliers; and the uncertainties of litigation, as well as other risks and
uncertainties, including but not limited to those detailed from time to time in
the company's Securities and Exchange Commission filings. These forward-looking
statements are made only as of the date hereof, and the company undertakes no
obligation to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise. Other brands and names
contained in this release are the property of their respective owners.
About Conexant Systems, Inc.
With a revenue run-rate of approximately $2 billion per year, Conexant is the
world's largest independent company focused exclusively on providing
semiconductor solutions for communications electronics. With more than 30 years
of experience in developing communications technology, the company draws upon
its expertise in mixed-signal processing to deliver integrated systems and
semiconductor products for a broad range of communications applications. These
products facilitate communications worldwide through wireline voice and data
communications networks, cordless and cellular wireless telephony systems,
personal imaging devices and equipment, and emerging cable and wireless
broadband communications networks. The company aligns its business into five
product platforms: Network Access, Wireless Communications, Digital
Infotainment, Personal Imaging, and Personal Computing. Conexant is a member of
the S&P 500 and Nasdaq-100 Indices. For more information, visit Conexant at
www.conexant.com.
About HotRail, Inc.
HotRail Inc, a venture-backed startup by Techfund Capital, Woodside Fund, Selby
Venture Partners, and Chase Venture Capital, is an Internet infrastructure IC
company developing advanced, integrated CMOS technologies for high-speed
switching, interconnect and scalable processing for Internet systems. The
company's multi-Gigabit interconnect cores and integrated switch fabric
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technologies eliminate data flow bottlenecks for greatly increased performance
in networking and computing applications, while providing for cost effective,
reliable and highly scalable systems.
HotRail, HotRail Channel, SkyRail and SkyRail Link are trademarks of HotRail
Inc. InfiniBand is a service mark of the InfiniBand Trade Association. All other
brands and names are the property of their respective owners.
DEFINITION OF TECHNICAL TERMS
ASYNCHRONOUS TRANSFER MODE (ATM) - High-speed networking technology that allows
transport of fixed-length cells without allocating physical channels for
specific connections. ATM supports simultaneous transfer of voice, data and
video traffic, and works in both LAN and WAN environments.
BACKPLANE CHANNEL - A wiring board, usually constructed as a printed circuit,
used in microcomputers and communications equipment to provide the required
connections between logic, memory and input/output modules.
BANDWIDTH - Describes information-carrying capacity or data-transmission rate of
a circuit. It can apply to telephone or network wiring as well as system buses,
radio frequency signals and monitors.
BROADBAND - A service or system requiring transmission channels capable of
supporting rates greater than the Integrated Services Digital Network (ISDN)
primary rate, based on architecture that allows users to access the carrier
networks at high speeds (above T1/E1).
COMPLEMENTARY METAL OXIDE SEMICONDUCTOR (CMOS) - A process for developing
silicon-based integrated circuits (IC) that are low cost and require less power.
CROSSBAR CHIP - A chip that performs network switching, in order to get beyond
the limitation imposed by contention on a shared bus. A crossbar is a
non-blocking switch.
ETHERNET - Ethernet is one of the most widely-implemented LAN standards, and it
supports data-transfer rates of 10 Mbps. A newer version of Ethernet, called
100Base-T (or Fast Ethernet), supports data-transfer rates of 100 Mbps. The
newest version, Gigabit Ethernet, supports data rates of 1 gigabit (1,000
megabits) per second.
GIGABIT - One billion bits.
INTERCONNECT - The conductive path required to achieve connection from one
circuit element to others in a circuit.
INTERNET PROTOCOL (IP) - The most important standard of the Transmission Control
Protocol/Internet Protocol (TCP/IP) suite on which the Internet is built. TCP/IP
is the language governing communications between all computers on the Internet,
and provides the set of instructions that dictates how packets of information
are sent across multiple networks.
LINE INTERFACE - The line is the physical medium that completes a circuit path,
identified typically by connector, slot and media type. The interface is a
data-link/physical-layer connection to this physical network transmission
medium.
NETWORK PROCESSORS - Flexible, highly-integrated, scalable and programmable
processors that make it possible to add new functions to a switch, router or
other core network equipment at virtually any time through software, rather than
hardware, modifications.
OPTICAL SWITCH - An all-optical, fiber-optic switching device that maintains the
signal as light from input to output. Optical switches work entirely in the
optical domain and support all transmission speeds since they are forwarding
light beams rather than processing bits.
PHYSICAL LAYER - The first of seven layers of the Open Systems Interconnection
(OSI) reference model, which is an architectural model of data communications
protocols that subdivides overall data-communications processes into seven
functional layers: 1) physical, 2) link, 3) network, 4) transport, 5) session,
6) presentation and 7) application. Each layer performs a specific
data-communications task with increasing levels of sophistication. The physical
layer governs hardware connections and byte-stream encoding for transmission.
ROUTER - A system that controls message distribution between multiple-optional
paths in a network. Routers use routing protocols to gain information about the
network, routing metrics and algorithms to select the "best route".
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SWITCH FABRIC - The internal interconnect architecture used by a switching
device, which redirects the data coming in on one of its ports, out to another
of its ports.
TERABIT - One trillion bits.
TRANSCEIVER - A transceiver is a combination transmitter/receiver in a single
package.
VIRTUAL PRIVATE NETWORK (VPN) - A secure path through a public network dedicated
to a particular user for specific data-networking services.
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