Tut Systems agreed to acquire Cosine Communications for in a stock-for-stock transaction valued at approximately $24.1 million. Tut Systems is acquiring Cosine primarily to provide additional financial resources. Tut Systems will honor Cosine’s existing customers’ support agreements, but does not expect to offer its products for sale to new customers. Tut Systems will incorporate Cosine’s intellectual property into its growing IP portfolio. Tut Systems will not have any additional employees or facilities as a result of the transaction.
The deal is expected to result in net cash to Tut Systems of approximately $22.75 million, and is expected to close by March 31, 2005.
Separately, Tut Systems said its revenue for Q4 2004 is expected to be $7.0 million, in line with the company’s previous revenue guidance. The company anticipates its revenue for the fiscal year ended December 31, 2004, to be $25.0 million.
“During the fourth quarter, we increased the number of major digital TV headend and remote headend wins. While we have passed a number of milestones for our first multimillion dollar MPEG-4 contract, we did not recognize any revenue from MPEG-4 sales during the fourth quarter of 2004,” said Randy Gausman, Chief Financial Officer. “The opportunities for MPEG-4 orders grew during the quarter, but were limited, in part by the availability of MPEG-4 set-top boxes. We also recorded our first sale of Astria product to a top tier North American carrier for further lab trials and an anticipated Telco TV field trial.”http://www.tutsystems.com
- In September 2004, CoSine initiated actions to wind down its operations. CoSine’s management team and its Board of Directors concluded that “maintaining the company’s existing employee headcount was not necessary for any of the strategic alternatives currently under consideration and the ongoing employee-related expenditures could potentially decrease total stockholder value.” CoSine had developed a carrier IP service switch featuring B-RAS capabilities.
- CoSine Communications was founded in 1998 and was based in Redwood City, California. The company completed its IPO in September 2000, selling 10 million shares at $23 per share.