Tut closes VideoTele.com acquisition

Tut Systems, having completed its acquisition of Tektronix subsidiary VideoTele.com, is integrating the two companies into a single entity providing headend-to-home technology for the fledgling video-over-telco business.

Tut closed the acquisition Nov. 7, paying Tektronix about $6.8 million in stock and cash, including a five-year note for approximately $3.59 million. Yesterday , the company updated its combined results for November and December, increasing its fourth quarter revenue estimate to between $2.5 million and $3.4 million and estimating operating growth margins in the mid-20% range compared to about 10% in previous guidance.

Additionally, the merged company trimmed its operating costs, slicing about 20% of its combined employee base and moving to smaller headquarters in Pleasanton, Calif.

“By relocating to a smaller headquarters office, the company expects to reduce its total monthly facilities cost by over 50%,” said Sal D’Auria, president and CEO of Tut Systems. “As we continue to integrate the two companies, we believe the combined company’s financial performance will benefit even further from improved operating efficiencies.”

D’Auria said that Tut is aiming at positive cash flow before the end of 2003.

“Tut’s value proposition remains the same. We make telecommunications equipment that enables service providers to offer new services over existing and future broadband networks,” D’Auria said. “Put simply, our system goes from dish to optics.”

Because Tut is “agnostic” to the type of access network over which content is transported, competition between satellite and traditional cable operators is “all goodness for the new Tut.”

“Whether it be a PON; whether it be an HFC network; whether it be a DLC with DSL or a DSLAM with ADSL, we believe that we can do well with customers in all those segments and really see the growth,” D’Auria said.