Most readers will remember U.S. Robotics being as synonymous to the Internet as Google is today. U.S. Robotics was a screeching beige box that allowed Internet users to connect at 54 Kbps a second. Apparently, the company is still squeaking along but at pace comparable to their then ubiquitous modem.
However, Platinum Equity, the Beverly Hills-based private equity firm has agreed to acquire the company. The exact price of the deal was not announced, but in an interview last year Joe Hartnett, CEO of Robotics, said he’d be looking for between $30 million to $50 million. Sources have confirmed the ballpark figure and said it was an all cash offer with the possibility that the firm would take on some leverage after the deal closes.
U.S. Robotics currently has revenue of $150 million and a 60% share in the analog modem market. Though the company doesn’t have much in the way of patents, it does have a history of innovation. Founded in 1976, the company set standards for data transfer throughout the next few decades as well as acquired Palm Inc. in 1995. 3Com bought the whole entity in 1997 and spun off Palm as well as U.S. Robotics in 2000, keeping the patents and leaving the company to fend for itself in a declining market.
Through what is starting to be a Platinum staple, the firm sees an opportunity where others see a dying business. Mark Barnhill, senior vice president, confirmed, “While the market for dial-up modems is declining, it’s not declining at nearly the rate we thought it would be. Plenty of small businesses like gas stations and their point-of-sale systems still use it and don’t have any plans on changing it.”
Barnhill continues, “We plan on this being a platform for us as the wireless and broadband market grows and that’s what Joe [Hartnett, CEO] was looking for, someone who had the capacity to assertively grow the business.”