Vendor lineage
Xylan - the fastest growing internetworking company there had been
LAN switching company founded 1993 in Calabasas, acquired by Alcatel in 1999.
Xylan was founded in 1993 in Calabasas, California by Steve Kim and three partners, and built high-bandwidth switches for local area networks. In its own acquirer’s words it was the fastest growing internetworking company in the history of the industry: more than four thousand customers and US$348 million of revenue in five years. Alcatel bought it in 1999 for about two billion dollars.
The numbers are worth stating precisely because they describe a market condition that no longer exists. A company founded in 1993 reached three hundred and forty-eight million dollars of annual revenue by 1998, growing about sixty-five per cent in each of its last two independent years, with roughly nine hundred and fifty employees. That is what the switching market looked like when every enterprise in the world was replacing shared-media hubs at once.
The acquisition was not a surprise raid. Alcatel had held 6.5% of Xylan since 1995 and the companies had worked together for four years, which is a reminder that the large acquisitions on this timeline are usually the last step of a long relationship rather than the first step of a new one.
The mechanics are visible because they were filed. A cash tender offer at thirty-seven dollars a share opened on 8 March 1999 and closed on 2 April with about ninety-seven per cent of shares tendered, after the antitrust waiting period expired. Reading the filings rather than the coverage is how a reader can see what was actually agreed, and they are cited here for that reason.
What Alcatel bought was access as much as technology: an American enterprise switching business, a federal division selling to the Air Force, NASA and the Department of Energy, and a position against Cisco, Lucent and 3Com in a market it could not otherwise enter quickly.
It grew in the years when designing silicon stopped requiring a factory. The foundry and fabless milestones on this site describe the arrangement that let a company founded in 1993 put custom switching silicon into a product without ever building a plant.
- Alcatel press release filed with the SEC, 24 March 1999 - the Hart-Scott-Rodino waiting period expired, allowing Alcatel to proceed with its acquisition of Xylan Corporation; the tender offer commenced 8 March 1999 at US$37.00 per share; Alcatel describes Xylan as the fastest growing internetworking company in the history of the industry, with more than 4,000 customers and total revenues of US$348 million in just five years, growing about 65% in each of the last two
- Alcatel press release filed with the SEC, 5 April 1999 - the tender offer completed; approximately 97% of Xylan shares were tendered; Alcatel expected to merge Xylan with a subsidiary by the end of April, and had also just finalised its US$350 million acquisition of Assured Access Technology
- CBS News and Associated Press, 2 March 1999 - Alcatel to buy Xylan for about US$2 billion in cash; Xylan founded 1993 in Calabasas, California; Alcatel already owned 6.5% bought in 1995, and the deal is described as the culmination of a four-year partnership; Alcatel chairman Serge Tchuruk on combining voice and data networking strengths
- Washington Technology, March 1999 - Xylan had about 950 employees and a US$1.5 billion market value against Alcatel’s nearly 200,000 staff; co-founded in 1993 by Steve Kim and three partners; its federal division had US$43 million in sales serving the Air Force, NASA and the Department of Energy
- Xylan Corporation (Wikipedia) - American computer networking equipment company, defunct 1999, acquired by Alcatel