Feeds

SPARCs fly: Tadpole sells hardware biz

MBO team

  • alert
  • submit to reddit

High performance access to file storage

Tadpole is selling its niche SPARC-based hardware division to a management consortium backed by an unnamed Hong Kong investor.

It will receive up to $11.6m - $3m in cash, $2.5m in a 7.5 per cent five year promissory note, and $6m by way of 5 per cent five-year convertible subordinated promissory note. The convertible bit is an option retained by Tadpole to take a 19.5 per cent stake in the hardware business, which sells SPARC-based laptops and rack servers.

Tadpole will continue to operate its software business, which it describes as a leader in peer-to-peer networking software. With a string of software customer wins under its belt (NTT, RSA, Ordnance Survey etc.) Bernard Hulme, group CEO, says it is the "right time for the software business to go it as a standalone."

There is certainly an element of risk here - R&D investment in the software division accounted for 82 per cent of the £2.8m loss reported in the group's last interims. In a statement at the time, Tadpole said it had used £2.7m of an £10m equity drawdown facility, set up in January this year. Also it has access to only $3m cash upfront-ish from the sale of the hardware division - although it also gets rid of a another lossmaker and probably it frees up some working capital too.

But Tadpole's focus on funding the software arm, and its small size, shows why it needs to divest. The split is prompted by the need to fund some promising network performance technology developed in-house at Tadpole's hardware division, Hulme said: "We publicly committed to running the hardware division on a cash-neutral basis. So this (the demerger) is an excellent solution, giving investors potential to participate in a liquidity event around the hardware division."

The network technology is based around something called TCP/IP offload engines. Up to a third of data input and output is taken away from CPU, often a performance bottleneck, increasing network speeds by up to 80 per cent, Hulme says.

Tadpole's current hardware division comprises its historic SPARC-based laptop business and a SPARC-based rackserver line, added through the December 2000 acquisition of Cycle Inc. of the US. It's lossmaking and pretty small, but costs are under control, and the firm is well-positioned to take advantage of any upturn, Tadpole Technology says.

The hardware MBO team, led by Mark Johnston and John Bannon, were inherited through Cycle. They already own 23 per cent of Tadpole Technology LLC, a company within Tadpole's hardware division. ®

Related story/press release

Tadpole cycles into SPARC Rackmounts

High performance access to file storage

More from The Register

next story
Seagate brings out 6TB HDD, did not need NO STEENKIN' SHINGLES
Or helium filling either, according to reports
European Court of Justice rips up Data Retention Directive
Rules 'interfering' measure to be 'invalid'
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Cisco reps flog Whiptail's Invicta arrays against EMC and Pure
Storage reseller report reveals who's selling what
Bored with trading oil and gold? Why not flog some CLOUD servers?
Chicago Mercantile Exchange plans cloud spot exchange
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.