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***Competitors Seek To Control Radio Via Satellite (December 2)
Communications Today reports that there is a race to launch and operate a digital audio radio service (DARS) satellite system. .A new consortium of 10 wireless communications service (WCS) groups recently submitted its satellite license and request for spectrum to the FCC. The entity was formed following the commission's 1997 ruling to auction key spectrum that originally was carved out of an existing allocation implemented by Congress for digital audio radio services.
WCS Radio is seeking FCC approval to launch two geostationary satellites to broadcast DARS signals. This would put the company in competition with XM Satellite Radio of Washington and New York-based CD Radio Corp. WCS Radio's satellites are to be located at 82.5 degrees and 118 degrees W. and would provide coverage to the continental United States. WCS Radio has accepted a proposal by Redondo Beach, Calif.-based TRW Satellite Division to manufacture the two DARS satellites.
XM Satellite Radio and CD Radio are planning to offer service by 2000. It is expected that CD Radio will be first to market, in time for the year 2000 Christmas selling season. One view is that XM will be operational by 2000 in time for the Christmas season.
XM recently changed its name from American Mobile Radio Corp. (AMRC). The company recently signed agreements with radio manufacturers Alpine Electronics Inc., Pioneer Electronic Corp. and the Sharp Corp. to manufacture and distribute XM- capable radios and audio systems for the U.S. market for its multichannel, satellite-delivered digital radio service.
STMicroelectonics will design, build and market computer chips to process the digital signal. All systems will receive AM, FM and XM broadcasts as well as possess features such as CD players. XM users will pay about $200 for the receiving equipment $10 for the monthly subscription fee.
CD Radio expects to beam 50 channels of commercial-free music, along with 50 channels of news, sports and entertainment for $9.95 per month. It plans to launch service in the second quarter of 2000, following the construction and launch of three satellites by Loral Space and Communications. The satellites, part of CD Radio's $718 million contract with Loral, currently are under construction and scheduled to launch during fourth quarter 1999. CD Radio has awarded Globecomm Systems a $2.9 million contract to provide a main origination Earth station facility in New York. That Earth station is expected to be operational by December 1999. Similar to XM's business model, customers will receive CD Radio's broadcasts through a two-inch satellite dish that would be affixed to their car's rear windshield. The signal will be relayed to a plug- and-play adapter that fits into a vehicle's existing cassette or CD slot.
***Satellite
Radio To Cover African Content
(December 10)
The Washington Times reports that satellite broadcasts are expected to create national radio stations. WorldSpace has displayed the first commercial radio sets available to receive satellite signals. The Washington company plans to start broadcasting early next year at least 50 channels of news and entertainment to Africa. The service is free, but the radios will cost about $300, a price that should drop over time. With a combined population of about 4.8 billion, Africa, Asia and Latin America contain a growing proportion of middle-class consumers who have limited choices of media.
U.S. consumers will start hearing satellite radio in 2000, when CD Radio Inc. starts beaming in 100 digital channels of music, news and talk radio to motorists. The company will air stations devoted to opera and merengue, four channels devoted to jazz and 10 stations of news.
The NAB has been opposed to direct broadcast satellites for radio. "We are concerned about satellite radio's effect on localism, and radio has always been the most local of services," said Dennis Wharton, a National Association of Broadcasters spokesman. "Whether it represents a serious threat, only time will tell." Consumers tune into local radio stations to receive weather reports, school closing and traffic updates, which national stations cannot offer, he said. "There's more diversity in terms of programming today than ever before," despite claims by satellite companies, he said. But that diversity is exactly what satellite radio companies are selling.
***WRN Leads Portable DAB Receiver Consortium (December 9)
The London-based World Radio Network is a consortium of UK organizations to develop a portable DAB Digital Radio receiver. The consortium includes Roberts Radio Limited, Roke Manor Research Limited (a subsidiary of Siemens) and Loughborough University. DAB Digital Radio is a transmission system designed to replace conventional analogue FM broadcasting. DAB offers high quality audio and the ability to transmit additional data - including images, maps and text - to a new generation of receivers.
The BBC has been operating DAB transmitters since September 1995, and these now reach more than 60 per cent of the UK population. Commercial services will start in the autumn of 1999 in Britain. Elsewhere in Europe, DAB is on the air in Germany, France, Sweden, Denmark, Norway, Finland, Italy, Austria, the Netherlands, Belgium and Poland. Receiver supply has been a problem for the consumer; currently in Britain five manufacturers offer in-car receivers, and one UK firm has introduced a hi-fi DAB tuner. No portable sets are available anywhere in the world.
"World Radio Network has been following the development of DAB Digital Radio with interest and enthusiasm," says Simon Spanswick, director of corporate affairs at World Radio Network. "Our English- language service has been on the air in London via DAB since November 1996, and we are also on the digital airwaves in other European cities. We see DAB Digital Radio as key to our future distribution strategy, and we want to ensure that consumers have the ability to tune to this exciting new delivery medium. This consortium is crucial for the success of DAB Digital Radio both in Britain and elsewhere in the world."
The four-partner consortium will develop a portable DAB receiver under the Roberts Radio brand, using electronics developed by Roke Manor Research. The vital "man-machine interface" will be developed by Loughborough University. "Roberts Radio was one of the first British radio receiver manufacturers," says Leslie Burrage, managing director of Roberts Radio. "We have a long heritage of quality radio products for UK and overseas markets and we are delighted that we are able to take the Roberts Radio brand into the 21st century with an innovative and future-proof product." "One of the key problems of analogue radio is that many consumers are frightened of touching the tuning knob in case they cannot find their favorite station again," says Prof James L. Alty, head of computer studies at Loughborough University. "The DAB Digital Radio receiver we are developing will be easy to use and will make full use of the sophisticated data that is carried on DAB for simple tuning between stations." Dave Hawkins, DAB product manager at Roke Manor Research states that "We have developed a DAB module - the Gold Card - and this will be the heart of the DAB receiver. The Gold Card's design is tried and tested and is already incorporated into the British-built hi-fi DAB tuner."
A second part of the consortium's work will be to develop "low bit-rate services" for transmission on the DAB system. The audio coding techniques developed for internet audio delivery have improved dramatically over the past few years, and now allow FM-quality or better sound to be received on personal computers using 32 kbs or less, compared with a minimum of 64 kbs on DAB. Developing low bit-rate services will potentially allow many more services to be broadcast on DAB Digital Radio transmissions. Uses for these services could include specialist-type programs to be sent to closed user groups on a subscription basis, or allow ethnic broadcasting to target specific sectors of the population.
The project partners will start work in early January, with the first prototype receiver available by the autumn of 1999. The first production models will be in the shops in time for Christmas of 1999.
***Battle Looms over Third Generation Cellular Phone Standards as Data Rates Are Sought to Pass T1 (December 4)
In excellent assessment of the next generation cellular market and technology the Irish Times reports that a generation in mobile telephony becomes obsolete rapidly. The first generation cellular phones, now called analog, were introduced in the 1980s, and their digital offspring, called GSM or DCS, brought international roaming in the 1990s. The third generation, appropriately enough, will surf the Net in the early 21st century. Despite being only at the conception stage, that third generation, called Universal Mobile Telecommunications System (UMTS) in Europe, already looks set to lead a prosperous life: market analysts last month predicted the British government's auction of UMTS licenses next year would attract bids of up to (pounds) 500 million sterling.
Stockbroker Henderson Crosthwaite said four licenses would be awarded in a UMTS market predicted to be worth (pounds) 3.6 billion by 2012. But despite the term "universal", UMTS has been developed by the GSM world, and like GSM has not been widely accepted in the US, although it is one of a number of competing second-generation systems there. The others are called DAMPS and IS- 95. Mobile companies in the US now want the global third-generation mobile standard to be closer to their own second generation, probably meaning multiple global standards will be required. Put another way, in the words of one European industry source, having watched European mobile companies rise to prominence on the back of GSM's success, US companies want compromise. UMTS has mixed European and Asian parentage: the European Technical Standards Institute (ETSI), based in Sophia Antipolis, southern France's Silicon Vallee, and the Association of Radio Industries and Businesses in Japan. Ericsson is already running tests with Japan's NTT DoCoMo, the world's largest cellular operator. UMTS is based on a radio interface which uses a standard called WCDMA, and can work with existing GSM systems, allowing a smooth transition to the next generation. But not in the IS-95 community, leading to calls to either change WCDMA or adopt multiple global standards.
"We do have some concerns that ETSI may have jumped the gun," says Mr Richard Engelman, the chief of the Planning and Negotiations Division at the FCC's International Bureau. The FCC disagrees with the European desire for a single global standard, preferring to let the marketplace decide. The marketplace in this case is not the consumer: the chief lobbyists are a collection of powerful mobile manufacturers, such as Motorola, Nortel and Qualcomm in North America, and Nokia, Ericsson and Alcatel in Europe. The US companies are concerned because the ETSI-preferred standard will not work with existing US digital networks based on the so-called IS-95 standard. Their preferred third generation standard is called CDMA2000.
The dispute has boiled down to a battle over patents, principally between Qualcomm and Ericsson. According to Mr Engelman, Qualcomm which is based in San Diego, holds several patents for the commercial application of original (second-generation) CDMA, and is threatening not to share them in a patent pool unless the European WCDMA merges with CDMA2000. Swedish company Ericsson responds that WCDMA doesn't infringe any valid Qualcomm patents. Its corporate director responsible for standards, Mr Mats Nilsson, says Qualcomm is the only US manufacturer lobbying for convergence between the two standards.
A resolution to this issue may be at hand, thanks to ever smaller and cheaper technology. A recent Motorola and Nokia presentation to the International Telecommunications Union (ITU) proposed merging only enough of the radio interface parameters to allow dual-mode handsets to be cheaply manufactured. Welcoming such a development, Mr Alistair Urie, product strategy director for mobile operations with the French company Alcatel, says it may only cost as little as 10 per cent extra to make a multi-mode phone if enough of the radio interface is common. If a solution to what Mr Urie calls "the radio war" can be worked out by the ITU's year-end deadline, the international body will be on track to recommend a standard or standards for global third generation by the end of March.
Called IMT-2000, the next generation of mobile will then offer truly global roaming, one of its cherished goals. Other goals include richer services, based mainly on faster data interfaces. Unlike GSM's current maximum data rate of 9,600 bits per second, UMTS will offer up to 2 megabits per second to users in small indoor cells, typically office-wide cells. Mr Fergal Kelly, the director of products at Eircell, says this will allow high-quality video or very fast and graphics-rich Internet access on mobile phones. He expects many applications based on machine-to-machine data communication, such as cars talking to navigation systems.
A first technology, called high-speed circuit-switched data, will allow up to 38 kilobits per second (kbps) data channels to mobiles, depending on local network conditions. This is expected sometime in late 1999. Then sometime around mid-2000, he says, a second technology called GPRS (generic packet radio service) will further increase the data speed to 115 kbps. While the interfaces speed up, the phones too are becoming more advanced. Smaller, cheaper and faster chips mean more memory coupled with bigger screens. Mr Kelly says these will initially feed the top end of the market, but mobile Internet browsers and video phones are "very much on the cards in the next 18 months", he adds.
***NextNet Inks Deal With Oren Semiconductor to Develop Chip to Enable High Speed Wireless Mobile Computing (December 15)
NextNet has signed an agreement with Oren Semiconductor to design a chip for NextNet's wireless data transmission system. This technology is designed to enable data transmission, over current cellular and PCS infrastructures, at LAN-like speeds greater than 1 Mbit/sec.
Under the terms of the agreement, Oren and NextNet will design and manufacture a data transceiver chip based on NextNet's patented technology, which allows the addition of data transmission, without compromising voice communication, to existing wireless voice telephony systems. The chip, a smart DSP baseband transceiver that operates in the presence of voice traffic, and can adjust system performance based on field conditions, is targeted for production within sixteen months.
The NextNet business model is based upon outsourcing key development activities to partners with proven expertise in key aspects of their business. Oren has the necessary DSP (digital signal processing) IC design expertise according to NextNet.
The NextNet architecture consists of a base station unit, which is added to an existing cellular or PCS voice communication base station, and the subscriber unit, which is used by an individual subscriber's computing device to connect to the system.
About NextNetNextNet is a privately-held start-up company focused on bringing wireless mobile computing over the Internet and IP-based networks to consumers worldwide, so that anyone will be able to get on-line services from anywhere without having to physically plug into a network. It is a data service alternative to 3G technologies including W-CDMA, CDMA2000, IMT2000, IS-136HS, EDGE, and UWC- 136, being proposed by companies such as Ericsson, Sony, AT&T Wireless Services, Lucent Technologies, Nortel, and others. NextNet technology will make high-speed data available sooner, for less investment, and without requiring the additional bandwidth demanded by proposed future 3G schemes. NextNet's technology runs as an overlay on any voice cellular system, reusing frequencies and infrastructure, it it claimed to enable a low cost deployment. The company received U.S. patent registration for this technology in 1996 and has received several additional foreign patent registrations since then.
On September 23, NextNet announced the formation of the company, a spin-off of Zamba Corp. and stated that it received initial funding of $8 million from an investment group led by Jafco America Ventures (US. and Japan). Investment proceeds will be leveraged over the next 12 to 18 months by NextNet to verify the technology through field demonstrations; to begin development and manufacturing of high-performance silicon at low price points suited to consumer markets; and to form partnerships with key carriers and equipment suppliers, laying the foundation for rapid deployment of the technology over existing cellular and PCS infrastructures. Company headquarters are in Minneapolis, Minnesota.
***Gemstar To Use Paging Frequencies For 2-Way TV Technology (December 1)
Newsbytes reports that Gemstar will use the 900 megahertz (MHz) paging frequencies for the return channel. While cellular is perhaps the most obvious choice for effective two-way communications, it is an expensive option.
Paging message frequencies, on the other hand, are a lot cheaper to pump relatively small amounts of data across, especially since more areas of the US have paging coverage than cellular.
According to Gemstar, it now has a patent on using 900 MHz two-way paging frequencies for an interactive TV system, allowing users to seamlessly execute purchase orders, receive confirmation, or access additional customized information while watching TV.
Gemstar says that its patent includes technology needed for the integration of the two-way interactive system with an electronic program guide (EPG).
Gemstar says it does not expect to see pager frequency-enabled interactive TVs appearing on the market much before the year 2000.
***Scientific-Atlanta and Avio Digital Integrate Explorer 2000 at the Center of Home Networking (December 1)
Scientific-Atlanta and Avio Digital announced plans to integrate the power of Scientific-Atlanta's digital network and the Explorer 2000 digital interactive set-top box with home networking which uses Avio Digital's MediaWire home network technology.
Explorer 2000 set-top can be then be used to control digital video, audio, computer data services, telephony and home controls throughout the house.
Avio Digital's technology, the MediaWire Home Network, is an advanced solution for high-speed digital home networking, using ordinary residential telephone wiring to connect devices and distribute digital media and information.
***Avio Digital targets Media Home Networking Market (December 1)
Following three years of research and development by Interval Research Corp., Avio Digital has been formed to develop and deliver the most advanced technology solution for distributing media throughout the home.
MediaWire home network, uses ordinary residential telephone wiring to connect devices and distribute digital media and information, including video (DVD and HDTV), CD-quality audio, telephony, computer data and home control signals, throughout the home. Digital media is distributed by the MediaWire home network at effective speeds of up to 88 million bits per second, with a range of 33 meters (over 100 feet) between devices when using standard Category 3 telephone wiring. With up to 100 new or legacy devices of different types, the MediaWire home network is capable of supporting a total cable length of more than 4,000 meters (about 2.5 miles).
Because of the efficiency of the MediaWire home network, a single telephone wire can provide enough bandwidth to simultaneously deliver 16 24-bit audio channels, four MPEG2 video channels (6 Mbps each), eight phone or ISDN lines, and over 3 Mbps of serial control or TCP/IP (Internet) data. Using the advanced technology of the MediaWire home network, which has been tested, proven and refined in the labs of Interval Research, Avio Digital is working to develop and license an integrated line of media networking. Avio plans to license MediaWire Home Network broadly, as well as to develop products that can take advantage of MediaWire capabilities.
Potential applications of the MediaWire home network include these:
· Home theater and surround-sound interconnection-Audio and hi-fi component interconnection
· Whole house media distribution and networking-Digital telephone interconnection
· Home PC networking-Home control and automationThe diversity of the MediaWire home network allows for the potential interconnection of a wide variety of devices:
· Audioequipment: CD players, amplifiers and speakers
· Video equipment: TVs, set-top boxes, DVD players and camcorders
· Telephony devices: voice telephones, fax machines and modems
· Computers and computer peripherals and
· Control devices: wireless touch pads, remote controls, home control interfaces
***DigiEffects
Ships Berserk AVX
(December 16)
DigiEffects announced that it is shipping Berserk AVX, its second set of Avid AVX plug-ins for Avid Media Composer and Xpress for Macintosh.
Like Aurorix 2 AVX, Berserk AVX is made up of a set of special effects tools made available in the Avid editing environment. With Berserk AVX available directly in Media Composer or Xpress, the digital editor will be able to work the footage directly to create these looks.
Berserk provides numerous effects including atmospheric effects like Blizzard, FogBank and StarField. Textural effects include Crystallizer, Pearls, Contourist and many more. Some of Berserk's other effects are distortions such as Ripploid, Perspectron, Cyclowarp, and Spintron. Rounding out the package are stylistic effects like VanGoughist, Newsprint, NightBloom, and Oil Paint.
Berserk AVX is available at a suggested retail price of $495 from most Avid Value Added Resellers as well as directly from DigiEffects. Berserk requires a MacOS based Avid Media Composer or Avid Xpress system that support the AVX plug-in standard, a CD-ROM Drive and 256 or more MB of RAM.
***General Instrument AND DIVA Systems deliver VOD to Homes (December 2)
General Instrument and DIVA Systems have announced delivery of DIVA's OnSet video-on-demand (VOD) service on GI's interactive digital cable platform using DCT 1000/1200 consumer set top terminals.
Suburban Cable, a division of Lenfest Communications, is delivering VOD to homes using General Instrument's DCT 1000/1200 Interactive Digital Consumer Terminal in selected neighborhoods in Delaware County, PA. This joint effort enables DIVA's two-way interactive OnSet service to be delivered through the cable operator's DCT-1200 digital set-tops, and potentially opens up VOD service to more than 28 million homes currently passed by GI's interactive digital systems.
For operators currently deploying GI's DCT-1000/1200/2000 interactive digital cable platform, the integration of DIVA's OnSet VOD service will provide them with a solution, from equipment to content for a commercially deployable VOD system.
Through an OpenCable compliant implementation of DIVA's OnSet service, operators will be able to build upon the embedded investment in the more than 2.0 million DCT-1000/1200's shipped to date, and lead the market by delivering a true video-on-demand service to their digital cable customers.
The DCT-1000/1200, GI's current generation of digital interactive set- tops, offers a rich feature set including real-time RF return, MPEG-2 digital video, Dolby AC3 Digital Audio, and the ability to integrate with embedded GI analog and digital systems.
DIVA's service gives the cable customers instant access to hundreds of the latest Hollywood movies, classic "library" titles, and an outstanding package of children's and family programming at any time. Additionally, the service offers fast-forward, pause, and rewind functionality.
***Motorola Announces IP Telephony Architecture (December 2)
Motorola announced its plans to develop Internet Protocol (IP) as the multimedia platform of the future, across all of its businesses wireless (cellular and private), satellite, copper networks, paging and HFC (hybrid fiber-coax) broadband systems.
This architecture will bring multiple IP services directly to the residence on an entirely new IP architecture. This IP architecture will be capable of providing both a technology-based and financial migration for Legacy Systems.
ING is leveraging its position in cable modems and packet voice to demonstrate the Voice over IP and cable modem in one box, using the Simple Gateway Control Protocol (SGCP). The SGCP is the proposed protocol suitable for systems providing residential services.
The one box solution, or Multimedia Terminal Adapter (MTA-1), includes components from a Vanguard Voice over IP gateway and Motorola DOCSIS 1.0 cable modem. This integrated device will run on an HFC network to allow a consumer or business to attach a conventional telephone instrument directly to the MTA-1 using a RJ-11 interface. The MTA-1 can be integrated into existing Motorola-equipped cable data networks or in new DOCSIS networks. Motorola, along with NetSpeak and 8 X 8, Inc., are among the inaugural companies to show an MTA-1 running the SGCP.
General availability of the MTA-1 product from Motorola is scheduled for mid 1999.
***Adrenalin Interactive Announces Agreement to Develop DVD Games for VM Lab's NUON Technology (December 15)
Adrenalin Interactive announced that it has signed a developer agreement with VM Labs to develop games for their NUON technology. NUON-enhanced DVD players will allow users to enjoy video games, educational and reference applications, in addition to the standard movies and audio discs playable on current systems.
Adrenalin is also contracted to develop prototypes of games to be played on the product, slated to be released in 1999. It is anticipated that the prototype will lead to full game development for publishers realizing the market potential for NUON interactive software.
Adrenalin has developed games for almost every new video game system, starting with Q*bert on Atari, and then Nintendo, Sega, PC, Mac, and now sports games on Sony PlayStation. Adrenalin will adapt its technology to NUON architecture, reflecting the latest advanced in 3D graphic entertainment. Details of the prototypes will be announced at CES in January.
VM Labs continues to sign consumer electronics manufacturers to produce hardware employing NUON technology. NUON will replace the MPEG decoder chip currently found in digital video products. The NUON processor provides the capability to decode digital video and audio, while delivering an enhanced user interface. NUON peripherals will include a variety of interactive controller devices such as an Internet kit to add functions such as Web browsing and e-mail.
Adrenalin Interactive develops/licenses console video games for Sony, Nintendo, and Sega consoles, entertainment titles for personal computers, and Internet "play-to-win-cash" games for the World Wide Web. The company also develops/licenses electronic toys, particularly interactive, Web-powered toys that are refreshed from a PC via the Internet. The company creates interactive games for digital set-top boxes and published or licenses certain PC games in 24 countries and 15 languages.
***@Home Network Licenses Macromedia Flash for Advanced Digital Set-Top Devices (December 17)
Macromedia and @Home Network announced that @Home has licensed Macromedia Flash Player technology for use in digital set-top products and services. The deal will allow @Home and its cable partners to include the technology in future set-top platforms, thereby enabling interactive Web content and native applications.
http://www.flash.com
http://www.home.net
http://www.macromedia.com
***Mentor Seeks Merger Agreement to Acquire Quickturn (December 15)
Mentor Graphics announced that it has sent a letter to Quickturn Design Systems stating that it is prepared to pay more for Quickturn in a negotiated merger transaction than the $14 per share price being posted by Cadence. The size of Mentor's merger proposal will be influenced by Mentor's due diligence demonstrating greater value for Quickturn and the invalidation of the $10.6 million termination fee, the $3.5 million expense reimbursement fee, and the lock-up option for Cadence to purchase 19.9% of Quickturn's common stock contained in the Cadence merger agreement.
Mentor is continuing to evaluate its alternatives with respect to its existing tender offer for all of Quickturn's outstanding stock for $12.125 cash per share, which has not been withdrawn and is scheduled to expire at midnight, New York City time, on January 11, 1999 unless extended.
Mentor also announced that it will file a new lawsuit against Quickturn, the Quickturn directors and Cadence in the Delaware Court of Chancery. The suit alleges that the Quickturn directors have breached their fiduciary duties to Quickturn's stockholders and seeks to enjoin consummation of the proposed Cadence merger and to invalidate the termination fees and stock option provisions in the Cadence merger agreement.
This latest breach of fiduciary duties by the Quickturn Board members came less than a week after the Delaware Court of Chancery ruled that the Quickturn directors breached their fiduciary duties in adopting a poison pill amendment.
Mentor's complaint challenges the board's failure to maximize stockholder value by deliberately excluding Mentor from the process of selling the company: Quickturn invited Mentor on December 8 to submit a higher proposal to acquire Quickturn, and Mentor advised the company on that date that it would respond to the invitation on December 9; nevertheless, before they received Mentor's proposal, the Quickturn directors approved the Cadence merger agreement on December 8. Prior to announcing the Cadence merger agreement, Quickturn never told Mentor that responding on December 9 would be too late, and that the company had decided to sell, or that it was negotiating with a third party.
The letter sent by Dr. Walden C. Rhines, Mentor President and CEO, to Keith R. Lobo of Quickturn Design Systems, Inc. reads as follows:
December 15, 1998Mr. Keith R. Lobo
President and Chief Executive Officer
Quickturn Design System, Inc.
55 West Trimble Road
San Jose, California 96131Dear Keith:
You and your fellow Quickturn directors have once again seriously breached your fiduciary duties to Quickturn stockholders.Less than two weeks ago, the Delaware Court of Chancery found that you and the other Quickturn directors violated your fiduciary duties to the Quickturn stockholders in your attempt to defeat Mentor's all-cash offer by amending your poison pill. The Court found that you and the other Quickturn directors were "unable to articulate a cogent reason" for your poison pill amendment.
That ruling should have caused you and the other Quickturn directors to act responsibly and to maximize value for you stockholders.
After we received the Chancery Court's ruling, I called your Chairman Glen Antle to assure him that Mentor remained willing to discuss a combination of our companies and to consider an increased offer if due diligence showed greater value. Our advisers also called Quickturn representatives who invited us on December 8 to consider presenting a higher offer, even as they denied Mentor the opportunity to conduct any due diligence. Our investment banker and lawyer each separately informed Quickturn on December 8 that Mentor would respond to Quickturn's invitation the very next day. Your investment banker confirmed that responding on December 9 would be acceptable. The last of these conversations between the representatives occurred on the evening of December 8. Instead of waiting to see Mentor's higher offer so as to maximize stockholder value, you went ahead and signed a merger agreement with Cadence the same night, closing the door on the response we promised by 5:00 p.m. the next day. The actions of the Quickturn Board show that you and your fellow directors learned nothing form the Court's recent finding that you breached your fiduciary duty. When you learned that Mentor was likely to respond to your invitation to submit a higher bid, you rushed to sign a deal with Cadence, instead of waiting less than 24 hours for Mentor's higher offer. To make matters worse, you signed up for a transaction at a price representing only a small increase above our initial offer at a cost to Quickturn stockholders of an excessive break-up fee of 6.9% of the Cadence merger consideration, a lock-up option for Cadence to purchase 19.9% of Quickturn common stock, employment agreements for you and other members of management, and a peculiar provision that gives you the potential power to cause termination of the entire deal if you're not personally happy. To put it simply, you appear to have been willing to sign any deal - no matter how bad it might be for your stockholders - as long as you got the autonomy and perquisites you wanted. We are prepared to pay more for Quickturn in a negotiated merger transaction than the $14 per share price being proposed by Cadence. The size of our merger proposal will be influenced by Mentor's due diligence demonstrating greater value for Quickturn and the invalidation of the $10.6 million termination fee, the $3.5 million expense reimbursement fee and the lock-up option for Cadence to purchase 19.9% of Quickturn's common stock contained the Cadence merger agreement that was entered into in breach of your fiduciary duties. Furthermore, we are continuing to evaluate our alternatives with respect to our existing tender offer. We are also filing suit against you and the other Quickturn directors as well as Cadence in connection with your new breach of your fiduciary duty to your stockholders.
Very truly yours,Walden C. Rhines
President and Chief Executive OfficerMentor also said the special meeting of Quickturn's stockholders will be held on Friday January 8, 1999 to consider Mentor's proposal relating to the removal of the current Quickturn Board and to replace the Quickturn directors with five new directors nominated by Mentor. The record date for stockholders to vote at the special meeting is November 10, 1998. The complaint filed in Delaware and related documents are available on a Mentor World Wide Web site.
***Gemstar Files Patent-Infringement Suit Against Pioneer (December 1)
Gemstar International Group announced that it has filed a patent-infringement suit against Pioneer Electronics, Pioneer North America and Pioneer New Media Technologies in the Federal District Court, Central District of California.
The suit claims, among other matters, that Pioneer willfully infringed certain Gemstar intellectual property, specifically two of the so-called Levine patents, by virtue of Pioneer's deployment, marketing, offers to sell and sale of its cable set-top boxes containing an unlicensed interactive program guide.
The Levine patents broadly cover, among others, an interactive program guide using locally stored or cached data. Gemstar is seeking an injunction and monetary damages.
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