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.
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.