US Robotics agrees to have US$50m Platinum makeover

This month’s capture of US Robotics by private equity firm Platinum Equity marks the latest chapter in the history of one of the most famous names of the technology industry.

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By  Peter Branton Published  August 28, 2005

This month’s capture of US Robotics by private equity firm Platinum Equity marks the latest chapter in the history of one of the most famous names of the technology industry. One of the archetypal garage start-ups, US Robotics was once valued at as much as US$6billion but was probably sold for less than US$50million, according to reports. The deal will see US Robotics retain its “independence and entrepreneurial spirit while benefiting from the financial resources and M&A capabilities of Platinum Equity” the two companies said in a statement. The deal was designed to both strengthen the company and position it for future growth, the statement said. In the early days of the internet and dial-up modems, US Robotics was one of the major forces in PC communications. Founded by three students working out of a garage, US Robotics took its name from a science fiction novel – I, Robot, by Isaac Asimov, which featured the firm US Robots and Mechanical Men. As the information superhighway took off in the 1980s and 1990s, US Robotics modems were used by millions of users to get connected. The company also brought the world the Palm Pilot before it was acquired by 3Com for US$6billion in 1997. US Robotics was spun off in 2000 and Palm has also been spun off, into two separate companies. US Robotics today has an installed base of more than 100 million products in more than 80 countries worldwide. However, the dial-up modem market is now fiercely competitive, with users happy to use cheaper, generic-brand, modems. While US Robotics has pushed hard into other areas such as wireless networking equipment, it has not managed to repeat its earlier success. The terms of this deal were not announced but US Robotics chief executive Joseph Hartnett had told a US newspaper last year that he was looking to sell the business for between US$30 million and US$50million. “Obviously, US Robotics is a shadow of what it used to be when it dominated the modem business,” Martin Reynolds, an analyst with Gartner, said in an interview with a US news site. “What we’ve got now is a company where its not a big opportunity in itself, but if you combine it with some other pieces, there’s a chance for the channel and the brand. It’s almost like purchasing a component to build it in to something bigger,” he added. “US Robotics has been at the forefront of modem technology for more than three decades, connecting millions of users around the world to the Internet,” Jim Levitas, senior vice president of mergers and acquisitions at Platinum Equity said. “As new broadband, wireless and security applications evolve, the company is well-positioned to grow. We believe we can accelerate growth by identifying complementary strategic acquisitions,” he said.

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