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DEC may sell network unit
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November 13, 1997: 7:36 a.m. ET
Cabletron reportedly may pay up to $500 million for business
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NEW YORK (CNNfn) - Digital Equipment Corp. is reportedly near a deal to sell its network-equipment unit to Cabletron Systems Inc.
According to published reports, the unit could fetch between $400 million and $500 million. The deal has not yet been sealed, but may be announced in the next few days.
Shedding the network unit would allow Digital to build on its already impressive $2.4 billion in cash reserves, assist the computer maker in its efforts to streamline its businesses and allow it to include networking gear from a variety of manufacturers in its systems.
For Cabletron, the deal could add up to $400 million to its existing $1.5 billion in annual revenue. Although Cabletron is still considered one of the nation's top networking companies, it has been losing market share to rivals Cisco Systems Inc. and Bay Networks Inc.
Cabletron's chief executive Donald Reed has in the past said he is looking for acquisitions to beef up its product lineup and add new customers.
Neither company would confirm a deal is near. Digital would only say it is continuing "to explore a variety of possible relationships with other companies." Cabletron would not comment.
Digital's network unit employs about 1,200 people. It reported a profit of $100 million in 1996, but lost money in the company's 1997 fiscal year, which ended last June.
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