Intel Deal Revives Proxim

For investors, Proxim (Nasdaq: PROX  ) looked like it was among the living dead. In its latest filing, the company that provides equipment for wireless networking received a "going concern" qualification from its auditors. This is a seemingly harmless way of saying that the company may go bust.

Despite being in the hot Wi-Fi space, the company saw its quarterly revenues decline from $40 million last year to $26.7 million. But, as can happen in the wacky world of technology, fortunes can change radically overnight. And this certainly happened yesterday when Proxim announced its deal with Intel (Nasdaq: INTC  ) .

Intel's massive distribution of millions of chips -- as well as limitless marketing dollars -- means it can essentially push new technologies into the mainstream. This has been apparent with Centrino. Now, by partnering with Proxim, Intel can push the new wave in wireless, WiMax.

Some tech background: Wi-Fi allows wireless access to notebooks within a couple hundred feet. WiMax, on the other hand, is faster and covers nearly 30 miles. In other words, WiMax allows for broadband wireless access in dense metropolitan areas and suburban communities.

In the deal, Intel will build out the chips for base stations and portable devices. Proxim will develop the equipment, such as the base stations. The ship date for the products is expected for early 2005.

Wi-Fi has scaled at an incredible rate, comparable to the growth rates of such things as ethernet or the Internet. Wi-Fi also is proving quite versatile. For example, it can be a gateway to VoIP (called voice over Wi-Fi) and disrupt the traditional telecom industry, such as Verizon (NYSE: VZ  ) , Qwest (NYSE: Q  ) , and SBC (NYSE: SBC  ) .

Intel calls its deal the start of the "broadband wireless era." Yes, it's grandiose, but Intel has the firepower to back up its claims. As for Proxim, it has gone from being a niche technology provider to a player in mass-consumer technology.

Fool contributor Tom Taulli is the author of The EDGAR Online Guide to Decoding Financial Statements. He does not own shares in any of the stocks mentioned.


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