Terayon Communication Systems (Nasdaq:TERN), a cable modem manufacturer, leaped 140% in the last four months of 2001, and shareholders are finally waking up to that reality. Towards the end of December 2001, Intel (Nasdaq:INTC) filed a Form 144 with the Securities and Exchange Commission, requesting to sell 78,400 Terayon shares.

The 78,400 shares priced at $9.8 would bring in $770,000.

Initially, the fact that Intel, a giant chip and semiconductor manufacturer, has any shares in the Rakib brothers' $570 million Terayon sounds a little bizarre. Intel made no direct investment in Terayon. The link between the companies is through the startup ComBox, sold to Terayon in February of 2000 in a $100 million cash and share exchange.

ComBox developed digital modems for cable and satellite that enable data communication at rapid speeds of 2-3 megabits per second. Davidi Gilo's DSP Communications had a 5% stake in ComBox, but after DSPC was bought by Intel for $1.6 billion at the end of 1999, Intel's holding in Terayon dropped to less than 80,000 shares.

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In the first quarter Terayon wrote its investment in ComBox off its books, and even stopped the marketing of a certain kind of cable modems. In Q1 2001 Terayon wrote off $575,000 following a shopping spree begun in late 1999 of ten, mostly Israeli, startups.