2 firms bet on switches for Web Local investors stake $8 million on new Salix devices

August 11, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Salix Technologies Inc., a Gaithersburg telecommunications consulting company, has received $8 million from two Baltimore area venture-capital companies to develop new switching equipment for merging telephone and Internet networks.

"What they are working on is very exciting. It's a whole new product category that we think has the potential to become very important," said Robert T. Coneybeer, a telecommunications industry expert with New Enterprise Associates of Baltimore, one of the venture-capital companies backing Salix.

NEA and Grotech Capital Group of Timonium are investing $4 million each in privately held Salix, an 8-year-old-company that provides telecommunications engineering services to Fortune 100 clients.

Lewis Bobbitt, vice president for marketing at Salix, said the company will not disclose details of the new switching equipment but that Salix has developed products that allow telephone customers to receive Internet services.

Internet data transmission via ordinary phone service and a modem is often sluggish unless the user has a cable modem or a direct high-speed line.

Bobbitt said the company expects to market a line of switching products this year that will make telephone systems more compatible with the Internet.

The equipment would be sold to telephone carriers and to a new breed of companies that provide data communications services through fiber and Internet-based networks, Bobbitt said.

Coneybeer said NEA thinks the new switching equipment could generate more than $500 million in sales and that Salix has the potential to be as significant an investment for NEA as Uunet of Fairfax, Va. NEA earned $189 million when Uunet was sold to MFS Communications for $2 billion.

He declined to disclose details of the switching devices the 32 people at Salix are developing.

Patrick J. Kerins, managing director and principal technology investor at Grotech, said telecommunications carriers are looking leverage the convergence of the phone network and the Internet, and will need equipment that allows them to bring advanced services to the market quickly and at a competitive price.

"Salix is developing the next-generation products that will help carriers meet these challenges," said Kerins.

Peter J. Barris, a general partner at New Enterprise Associates, said NEA agreed to participate in Salix's first round of venture-capital financing because the company has "the potential to play a major role in the next major shift in the telecom industry in the years ahead."

Daniel Simpkins, president of Salix, said in statement that his company is pleased with the backing from NEA and Grotech.

"NEA and Grotech have had the foresight and expertise to help shape many high-tech and information technology vendors in this market. We are pleased by the prospect of working with them as our partners as we aggressively pursue the opportunity to supply carriers with new, intelligent solutions that integrate diverse networks," Simpkins said.

Pub Date: 8/11/98

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