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CIDCO INCORPORATED
FILING TYPE: 425
DESCRIPTION: N/A
FILING DATE: SEPTEMBER 14, 2000
PERIOD END: N/A
PRIMARY EXCHANGE: NASDAQ - NATIONAL MARKET SYSTEM
TICKER: CDCO
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FILED BY CIDCO Incorporated
(Commission File No.: 000-23296)
Pursuant to Rule 425 under the Securities Act
and deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: CIDCO Incorporated
Commission File No. 000-23296
[CIDCO LOGO]
FOR IMMEDIATE RELEASE
SALE OF CIDCO TELEPHONY BUSINESS SOLIDIFIES
STRATEGIC SHIFT TO INTERNET APPLIANCE MARKET
Industry Leader to Focus on Expanding Internet Appliances and Services
MORGAN HILL, Calif., September 14, 2000--CIDCO Inc. (NASDAQ: CDCO), announced
today a definitive agreement to sell its telephony equipment business to a new
company formed and led by technology investor and executive David Lee. Under the
terms of the agreement, CIDCO will sell its entire line of telephones and
telephony products. Company officials said that after the sale CIDCO will focus
entirely on its rapidly expanding Internet appliance and services business,
including MailStation, its portable e-mail appliance that is sold through major
national retail chains.
"This divestiture signals a major strategic shift that we began over a year ago
with our entry into the Internet appliance market," said Paul Locklin, president
and chief executive officer. "This market is the key to our future and the sale
of our Telco unit will allow us to focus entirely on the development and
marketing of higher margin Internet-related products and services that build
recurring, subscriber-based revenue.
"The sale will accomplish a couple of very important objectives to this end.
First, it will monetize the fixed assets and inventory of our telephone
equipment business, which will gives us additional resources to get new products
to market faster, and accelerate channel development. Secondly, selling the unit
to David Lee's company assures a smooth and orderly transition because of his
proven leadership. Our Telco customers and their consumers can remain assured of
the continued quality and reliability of CIDCO telephony equipment products.
Most of our employees associated with this business line will be offered
continued employment with the new company."
The transaction is expected to be completed in December, subject to customary
closing conditions including approval by CIDCO stockholders and expiration of
the waiting period under Hart-Scott-Rodino. The deal is valued at approximately
$15 to $20 million in cash, including the present value of future payments for
inventory and a royalty on product sales by the new company. "This frees up
substantial working capital that will be deployed to the Internet appliance and
services business, allowing a significant increase in product development
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CIDCO 3 of 4
activities, with a goal of speeding the market introductions of new products,"
said Rick Kent, chief financial officer and chief operating officer. "We'll also
retain the Telco accounts receivable generated through the closing date as
additional working capital for our Internet appliance business"
"This is an exciting milestone in the development of CIDCO," said Locklin. "We
recognized that the Telco and Internet product lines have become increasingly
more distinct and different. Our Internet appliance business is based on a
recurring service revenue model, while our Telco business has a predominately
hardware business model. This transaction will allow each organization to focus
on the appropriate performance metrics and customer needs in order to achieve
maximum success".
The new company formed by Lee has also acquired rights to the brand name and
will be known as CIDCO Communications, LLC but will have no affiliation with
CIDCO Incorporated. The company plans to remain in Morgan Hill and sublet
facilities from CIDCO. Lee is a well-known business leader in the technology and
communications industries. He was a co-founder of Qume Corporation and,
following its acquisition by ITT, later became president of ITT Qume and a vice
president of ITT. A former president and chairman of Data Technology
Corporation, Lee currently is chairman of eOn Communications Corp. and Cortelco
and serves as a regent of the University of California.
"We're totally committed to continuing the leadership and reputation that CIDCO
established in telephony equipment and accessories," said Lee. "We're keeping
the telephony business management team intact and we are going to commit the
necessary resources to ensure the highest quality, customer service and
technological leadership."
The company has scheduled a conference call to discuss this news release on
FRIDAY, SEPTEMBER 15, 2000 at approximately 8:45 A.M. EASTERN TIME (5:45 A.M.
PACIFIC TIME). To participate in the call, dial 1-800-818-5264 TEN MINUTES
before the conference call begins and ask for the CIDCO conference call using a
pass code of 622076. A replay will be available shortly after the conclusion of
the call until September 21, 2000. To access the replay, dial 1-888-203-1112
using a pass code of 622076.
Investors will also have the opportunity to listen to CIDCO's conference call
over the Internet through Vcall at www.vcall.com. To listen to the live call, go
to the Vcall Web site at least 15 minutes before the start of the call to
register, download, and install any necessary audio software.
CIDCO Inc., founded in 1988, is a worldwide leader in telephony and Internet
appliance products and services that empower consumers to communicate simply and
easily over advanced networks and the Internet. The company introduced its first
Internet appliance in 1998 for a world moving into the developing Internet
appliance era and has extended this vision to devices that will make email and
other information services readily available to consumers that don't have access
to or require traditional computers. Through its alliances with many of the
world's leading telephone companies, CIDCO develops and sells advanced network
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CIDCO 4 of 4
appliances such as network feature telephones, Caller ID devices and internet
appliances that enable consumers to maximize telephony networks and Internet
services. CIDCO is headquartered in Morgan Hill, California, at the South of
Silicon Valley. For additional information, visit www.cidco.com or call (408)
770-1162.
MailStation and CIDCO are trademarks of CIDCO Inc. All other trademarks are the
property of their respective owners.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements within the meaning of the
Federal securities laws and is subject to its safe harbors. The forward looking
statements reflect management's forecast of certain aspects of the company's
future. They are based on current information that we have assessed, but which
by its nature is dynamic and subject to rapid and even abrupt unexpected
changes. Forward-looking statements include, but are not limited to statements
regarding: (a) the estimated completion of the proposed transaction, (b) the
continued growth of the Internet appliance business, (c) the transition, (d)
increases in product development and faster time to market for products.
The following are among the factors that may cause actual results to differ
materially from the forward-looking statements: inability to obtain necessary
stockholder, regulatory or third party approvals, or other failures of
conditions to the transaction, market acceptance for the Company's products,
technological difficulties, resource constraints in product development and
introduction, component shortages, business conditions in the internet, internet
appliance, telecommunications industry and general economies, both domestic and
international, lower than expected customer orders; failure to successfully
implement a national retail distribution channel and a brand marketing campaign;
failure to obtain significant subscriber growth and competitive factors. Other
potential risks and uncertainties and other factors are discussed in more depth
in CIDCO's filing with the SEC, copies of which may be accessed through the
SEC's world wide web site at http://www.sec.gov.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Investors and security holders of CIDCO are advised to read the proxy statement
regarding the business combination transaction referenced in the foregoing
information, when it becomes available, because it will contain important
information. CIDCO intends to mail a proxy statement about the transaction to
its stockholders. Such proxy statement will be filed with the Securities and
Exchange Commission. Investors and security holders may obtain a free copy of
the proxy statement (when available) and other documents filed by the company at
the Securities and Exchange Commission's web site at http://www.sec.gov. The
proxy statement and such other documents may also be obtained from CIDCO by
directing such requests to the address listed above.
CIDCO and its officers and directors may be deemed to be participants in the
solicitation of proxies from CIDCO's stockholders with respect to the
transactions contemplated by the definitive agreement. Information regarding
such officers and directors is included in CIDCO's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 and in its proxy statement for its
2000 annual meeting, filed with the Securities and Exchange Commission. These
documents are available free of charge at the Securities and Exchange
Commission's Web site at http://www.sec.gov and from the CIDCO contact listed
above.
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COMPANY CONTACT: MEDIA CONTACT:
RICHARD KENT DON KING
CHIEF FINANCIAL OFFICER BATES CHURCHILL INVESTOR RELATIONS
408.779.1162 713.267.7280
