Belden acquired Trapeze Networks

St. Louis - Belden – June 6, 2008 – (NYSE:BDC) has entered into a definitive agreement to acquire Trapeze Networks, a leading provider of wireless local area networking (WLAN) equipment and management software, for $133 million in cash. The acquisition builds on Belden's market-leading position as a complete signal transmission solutions provider by adding a recognized leader in the wireless LAN market.

Wireless extends the reach of Belden's physical-layer cable and connectivity products and enables the company to address the growing mobility needs of customers. "Belden's strategic vision is to provide the best signal transmission solutions to our customers regardless of technology," said John Stroup, President and Chief Executive Officer of Belden. "We believe the acquisition of Trapeze Networks uniquely positions Belden to offer our enterprise customers tailored connectivity solutions that benefit from blending the strengths of copper, fiber and wireless technologies. Trapeze Networks Smart Mobile wireless LAN solutions deliver superior performance, security, reliability and management capabilities, making this a highly attractive wireless investment for Belden's future. The acquisition will make Belden the world's largest unified wired and wireless solutions provider and will provide expanded market access for Trapeze Networks' Smart Mobile solutions.

"We believe we are at an inflection point in enterprise wireless LAN expansion, a market that is already growing nearly 25 percent per year, and that wireless connectivity is no longer considered a luxury but is a customer expectation," added Mr. Stroup.

Trapeze Networks, a privately held company based in Pleasanton, California, with 2007 revenues of $56 million, sells its products into healthcare, education, manufacturing, retail, government and other enterprise verticals through OEMs and distribution channels. The Trapeze product portfolio is an end-to-end WLAN system built on a highly scalable and secure wireless operating system running on Trapeze Networks access points and controllers and features the industry's most robust management software capabilities. More than 4,000 organizations around the world have deployed Trapeze wireless platforms.

Jim Vogt, President and Chief Executive Officer of Trapeze, said, "During the past six years, enterprise customers around the world have invested in Trapeze Networks Smart Mobile because they can depend on it for constant connectivity and reliable mobility. The superior performance and cost benefits of our highly acclaimed wireless LAN products have fueled our global growth through distribution and through our OEM relationships with 3Com, Enterasys, Nortel and other large networking companies. Our customers can now be assured of continued product innovation and new capabilities from the combined resources of Belden and Trapeze."

Impact on Belden's Outlook

Because Trapeze Networks sells software as well as hardware and services, the company is required under accounting principles generally accepted in the United States to defer and amortize certain revenues over the lives of contracts until it can establish vendor-specific objective evidence of the fair market value of each separate deliverable. The majority of Trapeze Networks' revenue is deferred and is typically amortized over periods of a year or more. This accounting treatment makes the acquisition more dilutive to Belden's expected earnings in 2008 and 2009 than would otherwise be the case.

John Stroup said, "The acquisition of Trapeze Networks furthers our strategy, and we expect that it will provide a return on invested capital for Belden consistent with or better than that of our successful 2007 acquisitions. We expect that the total dilutive impact of revenue deferral and amortization for 6 months in 2008 to be $0.15 to $0.20 and in 2009 $0.25 to $0.30. Despite this impact, we expect the transaction to be neutral in operating cash flow in 2008 and a positive contributor to operating cash flow in 2009 and beyond.

"The expected dilution from the Trapeze acquisition, including the impact of revenue deferral and the recurring amortization of intangible assets resulting from the purchase, but excluding short-term, nonrecurring amortization, will be in the range of $0.27 to $0.32 in 2008 and $0.25 to $0.30 in 2009," said Mr. Stroup. "We expect that the acquisition will be accretive on a GAAP basis in 2010 and beyond.

"Our outlook for 2008 remains unchanged except for the expected effects of the planned acquisition. Because of the mid-year timing of the closing of this transaction and the deferral of Trapeze Networks' revenue, our expectations for consolidated revenue remain in the range of $2.2 to $2.3 billion. We expect our operating margin to be in the range of 11 to 12 percent, and we are adjusting our expectation for 2008 earnings per diluted share to the range of $3.15 to $3.35."

Trapeze launches RingMaster-200

Wi-Fi network maker Trapeze Networks has launched a pre-configured appliance that can manage up to 5000 wireless access points or 1000 wireless switches - and won a giant contract for 802.11n Wi-Fi.

The RingMaster-200 is a hardware version of Trapeze's RingMaster network management software, and is pre-tuned to manage wireless LANs. “Today, it’s common for enterprise Wi-Fi networks to include thousands of access points cover hundreds of acres and span multiple sites," said Ahmet Tuncay, Trapeze's marketing vice president.

Before this product, Trapeze's largest hardware device managed around 200 access points, while rival Aruba was ahead with its MMC-6000 which can manage 2048 APs. Both companies use software to manage larger installations, which has normally run on general purpose servers. Aruba's recently purchased AirWave management platform uses software to go up to 50,000 APs. Trapeze's appliance will make the process of design and management simpler, says Trapeze, saving hundreds of IT hours.

Ringmaster was central to Trapeze's recent success in winning what it calls "the world’s largest deployment" of the new 802.11n standard, a $15 million, five-year upgrade to the wireless LANs at the University of Minnesota. The upgrade will include $3 million on access points alone, swapping out existing APs from D-Link, Cisco and other vendors for around 9,500 of Trapeze's 802.11n access points. Ringmaster "…allowed us to quickly import our own CAD drawings and immediately begin Wi-Fi planning for 300 buildings, including 1,300-plus floors," according to Steve Cawley, the university’s vice president of IT.

RingMaster has been a big part of Trapeze's WLAN strategy from the beginning, for dealing with Wi-Fi propagation issues, and managing the lifecycle of WLANs. The appliance can make a "virtual" site survey based on architectural drawings, and configure access points for specific locations before they are installed.

The appliance is based on a Linux OS, and has two redundant 250GB hard drives to gather monitoring and performance data. The basic unit costs $19,000 (£9,515) including a licence to support 250 APs, which can be extended in steps of ten to 1000, up to 5000, if users buy software keys.

Trapeze's claims - like most claims in the ever-competitive Wi-Fi world - have already been disputed. Aruba told us that it already has an appliance that manages 5000 APs, called the MM-200. We have been unable to find this product on Aruba's site, however.
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