March 24, 1997 5:00 PM ET
Hayes CEO on buyout: 'Make me an offer'
By Charles Cooper

  Should the right offer come his way, the head of Hayes Microcomputer Products Inc. says he would "absolutely" agree to an acquisition by a networking company.

The disclosure comes only two weeks after the Norcross, Ga., company announced plans to acquire Cardinal Technologies Inc. in a deal combining the No. 2 and No. 3 players in the retail modem market.

But in an interview today, Hayes' CEO, Joe Formichelli, said he was open to discussing merger possibilities with a larger manufacturer that sold complementary product lines.

"If I had someone come in here who had a business like remote access and wanted to know about partnering, would my alarms go off? Yes," said Formichelli. "Absolutely."

Formichelli added, however, that "I haven't got any calls like that."

Late last month, Hayes' archrival, U.S. Robotics Corp., agreed to be acquired by 3Com Corp. However, Formichelli said Hayes does not need to pursue a merger with a larger company as a counterweight to U.S. Robotics' recent move. In fact, he added, the decision to merge with 3Com "may even defocus them a little. I think they're cashing out."

However, Amar Senan, an analyst at Volpe, Welty & Co. in San Francisco, rated the company's chances of being acquired by a larger networking concern as slim.

"The other modem makers are too puny, so it would have to be one of the major network players," Senan said. "But they don't want to get into the analog modem market."

He also said it was unclear what advantages Hayes would offer a networking manufacturer.

"The Hayes brand is synonymous only with the analog modem market," Senan said. "Despite that great brand name, their technology is licensed from Rockwell. Partnering is a different issue, and they need to take pragmatic positions to sustain their position."

Separately, Formichelli indicated that modem sales were being hurt because dealers were postponing plans to stock up on inventory until the newer 56K-bps modems were available.

"The quarter is not what I wanted it to be," Formichelli said, adding that dealers were holding back buying the company's 33.6 modems because of the attention garnered by 56K bps.

"Because of 56K bps, I've been told, 'How much 56K can you send me?' " Formichelli said.

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