Chapter 14 - Internetworking: Emergence 1985-1988
14.15 DCA, Racal Electronics, Timeplex, Paradyne, and Stratacom
Digital Communications Associates (DCA)
Management of DCA quickly concluded that the acquisition of Cohesive Networks in September 1986 would not lead to the dominant company they wanted to build. Other leading firms in Data Communications, like Codex, Micom and Network Equipment Technologies either had entered, or were rumored to be interested in entering the local area networking, or Networking, market. It made sense that DCA should as well. In August 1987, DCA acquired the assets of Fox Research, the developer of 10NET for $10 million.74 Subsequent to the acquisition, DCA renamed Fox Research to: 10NET Communications, Division of DCA. 10NET was a simplistic, resource-sharing network. Even the upgrade to StarLAN in February 1987 made little difference. Eager to sell more than just an entry level LAN, when Ungermann-Bass’s (UBs) stock price tumbled during the October 1987 market crash, DCA quickly made an offer to merge the two firms. Only UB’s Board of Directors had no interest in the “hostile take-over” and rejected DCA’s efforts. Still, as of the end of 1988, DCA had transformed itself through the acquisition of Data Communication (Cohesive Networks) and Networking (Fox Research) products.
Racal Electronics PLC, parent of Racal Data Communications Group (RDCG)
RDCG had been mostly content remaining a modem company after its acquisition of Milgo and Vadic in 1977. By the mid-1980s, however, RDCG began broadening its product offerings by distributing other companies’ products. But by the end of 1988, RDCG management concluded that if they were going to be in these new businesses, they had better acquire the companies and not just distribute their products.
Timeplex (a subsidiary of Unisys)
Unisys acquired Timeplex in November 1987 for $307 million. In 1986, the last year Timeplex financial data was available, sales were $119 million.
Paradyne had long challenged Codex for leadership in the market for high-speed modems. Then management began seeing modems as just an important sub-system of larger systems that could lead to a much larger, and more valuable company. They gallantly bid on a new system for the Social Security Administration and won not the desired sales but unwanted lawsuits. In December 1988, AT&T, playing the “White Knight,” acquired Paradyne for $237 million.
Stratacom entered this history when Motorola/Codex invested $2.5 million in 1987. For that year Codex purchase $3.2 million as both an end user and distributer, thus accounting for 60% of Stratacom sales. The author does not have access to Codex’s percentage of revenue for 1988.
“Acquisition and merger plans proceed,” Network World, August 31, 1987, p. 7