Terayon Communications Systems (Nasdaq:TERN), a developer of modems for cable and digital video, and voice and data solutions, is about to join the long list of corporate giants, including Infineon Technologies (NYSE:XETRA:IFX), DPSI, Applied Micro Circuits Corporation (Nasdaq:AMCC), and Mindspeed Technologies, which have closed or reduced their R&D activities in Israel.
Sources inform “Globes” that that Terayon is about to fire about 20 employees at its R&D center, located in the Azrieli Towers in Tel Aviv, although it will not completely liquidate its activity in Israel. Terayon will continue to operate sales and marketing and technical support departments in Israel. Terayon VP and EMEA manager Eli Mor will stay on.
Run by brothers Zaki and Shlomo Rakib in recent months, Terayon's R&D center is being closed because the company is cutting back development of CMTS (cable modem termination system), and because of Terayon's business focus. Sources close to the company claim that with the resignation of Zaki and Shlomo Rakib and the appointment of new management, the company's sentiment toward Israel evaporated.
It was not always thus. During the high-tech boom years, Terayon was very active in Israel, and made two large acquisitions. It acquired Radwiz for $50 million in cash and shares in 1998, and Telegate for $400 million in 1999.
Like other technology companies, Terayon fell into crisis with the market slump. At their peak, Terayon's shares were traded at $150, but fell to $1.50 at their nadir. Terayon once placed great hopes in its Israeli R&D center, renting thousands of square meters in the Azrieli Towers, which were later sublet to other companies.
Terayon laid off 20% of its workforce in March 2003, and its condition seemed to improve in the past year. Shlomo Rakib announced he was resigning as president and technology manager at the end of September 2004, following Zaki Rakib's resignation as CEO in May.
Eli Mor declined to comment on the report.
In response to a question from "Globes" yesterday, Terayon spokesman John Giddings said, "We previously announced that the company would cease further investment in future development of its Cable Modem Termination System (CMTS) product line, and that in connection with this action, the company anticipated a severance charge in the quarter ending December 31, 2004. No further details have been provided and, as a public company, it is our policy to not comment on rumors. Any further details of the company’s actions will be provided in direct public statements as required."
Published by Globes [online], Israel business news - www.globes.co.il - on December 14, 2004