Proxim Is Sold, Files for Bankruptcy

Proxim's deal is with Moseley Associates Inc.; no proceeds of the sale are expected to go to Proxim stockholders.

Beleaguered wireless hardware maker Proxim has agreed to sell its assets to Moseley Associates Inc. for $21 million, the companies announced over the weekend.

At the same time, Proxim Corp. is filing for Chapter 11 bankruptcy.

The sale will be implemented through the U.S. Bankruptcy Court for the District of Delaware, said officials at Proxim in San Jose, Calif.

As part of the deal, Moseley, of Santa Barbara, Calif., will provide Proxim with bridge financing of up to $6.2 million, to be offset against the purchase price. No proceeds of the sale are expected to go to Proxim stockholders.

A pioneer in the space, Proxim was a leading seller of corporate wireless LAN hardware throughout the 1990s, well before Wi-Fi was a household term.

But in recent years, the company struggled with competition against Cisco Systems Inc., Symbol Technologies Inc., and myriad startups.

/zimages/4/28571.gifRead more here about Proxims plans to ship WiMax technology.

"Our first wireless deployment was with Proxim AP1000 [access points]," said Chip Greel, manager of network services at Finisar Corp., in Sunnyvale, Calif., which now uses WLAN hardware and software from Trapeze Networks Inc.

"When we decided to get serious about wireless, I purchased a newer Proxim AP and was very impressed with the capabilities it had. With the proper investment in configuration and testing, it appeared that it could do many of the things the high-end switch-based solutions like Trapeze and Airespace [Inc.] would do, such as multiple SSIDs [service set identifiers], which would trunk VLANs [virtual LANs] into legacy switches, so you could support guest wireless as well as corporate private WLAN," said Greel.

"But the truth is that I didnt have the time to invest in testing out this solution. Trapeze came in and made their solution work very quickly," Greel said. "Proxim did not have central management software for their platform; it was farmed out to a third party.

"I think Proxim started to become a hard sell as the capabilities and ease of use of the low-end solutions from [Cisco division] Linksys, Netgear [Inc.] and the like have improved greatly. Linksys now supports more advanced authentication schemes, so the premium price of Proxim is much less attractive for smaller shops who want to increase security," he said.

Under the terms of the transaction as contemplated, no proceeds of the sale are expected to be distributed to Proxim stockholders.

Moseley is expected to continue Proxims product lines, officials said.

"Our principal post-acquisition focus will be to earn the trust and respect of Proxims customers, suppliers, partners and employees," said Jamal Hamdani, president and chief executive officer of Moseley, in a prepared statement.

"Our plan includes providing an invigorating and exciting work environment for Proxims employees as well."

Editors Note: This story was updated to include user comments.

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