Mylex
Mylex was an American computer-hardware company best known for RAID controllers and earlier PC expansion cards, motherboards, and peripherals.
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Overview
Mylex Corporation was an American computer-hardware company founded in May 1983 by Anastasios Kyriakides. It emerged during the expansion of the IBM Personal Computer ecosystem and initially concentrated on add-in cards and peripherals for IBM PCs and compatible systems. The company's early portfolio included multifunction communications and video cards, graphics hardware, and later a text-scanning product based on optical character recognition. Its commercial prospects were closely tied to orders from large corporate customers, including IBM and Systeme Corporation, which together accounted for most of its unit sales in 1985. Mylex entered the public market soon after its formation, filing for an initial public offering in October 1983 and raising approximately $3.5 million. Its early growth was disrupted in 1986 when IBM and Systeme reduced or withdrew orders for several products. The resulting sales decline brought the company close to bankruptcy. In December 1986, founder Kyriakides transferred 32 percent of his shares to an investor group led by M. Akram Chowdry, chairman of Prime Circuit Technology. Chowdry replaced Kyriakides as president and chairman, while Kyriakides remained on the board with a smaller ownership position. The company moved its headquarters from Miami to Fremont, California, in 1987. Beginning in 1988, Mylex also produced complete motherboards for IBM-compatible computers. These boards were designed as upgrades for earlier XT- and AT-class systems and used newer Intel 80386- and 80486-family processors. The motherboard business did not achieve the expected scale. Inventory of processors became obsolete, contributing to a reported loss in 1991, while motherboard sales remained weak into 1993. This period pushed Mylex to search for a more defensible position in the personal-computer and server-hardware markets. Mylex's decisive change in direction began in 1993, when it focused on RAID controllers and LAN-management software for file servers and workstations. RAID technology allowed multiple disk drives to be managed together for improved performance, capacity, or fault tolerance, making it important to growing business-server environments. The new emphasis was substantially more successful than the company's earlier motherboard effort. By the end of 1995, Mylex was reported to hold about 75 percent of the RAID-controller market and had exceeded $100 million in revenue. In December 1995, Mylex announced the acquisition of BusLogic, a Santa Clara company associated with storage and connectivity hardware. The transaction was completed in early 1996 through a stock exchange, with the final value reported at more than $67.9 million after additional terms. BusLogic's manufacturing capabilities and Mylex's expanding RAID portfolio helped drive revenue to $173 million in 1996. The company employed 397 people at its peak in July 1997 and established a research-and-development facility in Boulder, Colorado, during the late 1990s. Mylex nevertheless faced pressure from major customers and competitors. In 1996, Hewlett-Packard and IBM either developed RAID products internally or shifted business toward Adaptec, contributing to a decline in Mylex's share price. The company reduced its workforce and planned to close the former BusLogic plant in 1997. Revenue was reported at $135.7 million in 1998, and IBM agreed in July 1999 to acquire Mylex for approximately $240 million in cash. The transaction closed in September 1999, with Mylex continuing as an IBM subsidiary and retaining facilities in Fremont and Boulder. IBM sold the Mylex division to LSI Logic in 2002 for an undisclosed amount. The divestiture was completed in December of that year, when Mylex's assets and eight remaining Boulder employees were absorbed into LSI Logic's Storage Systems division in Tucson, Arizona. Mylex therefore ceased to operate as an independent company, although its RAID-related technology and personnel continued within successor storage businesses.
History
Mylex was established in Miami, Florida, in May 1983 by Anastasios Kyriakides, who had previously founded Lexicon Corporation, a maker of telecommunications equipment for mainframe computers. Kyriakides created Mylex to participate in the rapidly expanding market for IBM Personal Computer expansion cards and peripherals. The company's early products included the Chairman multifunction communications and video card, followed by the Advanced Graphics Adapter, which targeted computer-aided design and manufacturing users and supported color graphics on compatible monitors. Mylex's early commercial base included IBM and Systeme Corporation, which together represented most of its unit sales in 1985. The company also pursued scanner technology. After receiving a broad patent related to handheld scanning, it developed the Text Scanner, later associated with the Text Wand, which used optical character recognition to convert scanned text. Instead of becoming a breakout product, the scanner effort coincided with a difficult period. A 1986 sales slump, caused in part by IBM and Systeme reducing their orders for other Mylex products, left the company close to bankruptcy. In December 1986, Kyriakides transferred 32 percent of his shares to an investor group led by M. Akram Chowdry of Prime Circuit Technology. Chowdry became Mylex's president and chairman, while Kyriakides retained a board position and a smaller stake. Mylex relocated its headquarters from Miami to Fremont, California, during the summer of 1987. The company then broadened its hardware range by producing complete motherboards for IBM-compatible computers. These products were intended to upgrade older XT- and AT-class systems with newer Intel 386 and 486 processors. The motherboard strategy produced limited results. Sales were stagnant, and by 1991 the company held inventory of processors whose value had fallen as the market moved forward. The inventory write-down and related storage costs contributed approximately $800,000 to a quarterly net loss of roughly $1.2 million. Although reported sales increased during the period, profitability deteriorated sharply, and Mylex continued searching for a more sustainable business segment. In 1993, Mylex began concentrating on RAID controllers and LAN-management software for file servers and workstations. This repositioning aligned the company with enterprise storage requirements and proved more successful than its motherboard business. By the end of 1995, Mylex was reported to have approximately 75 percent of the RAID-controller market and more than $100 million in revenue. In December 1995, it announced the acquisition of BusLogic, a Santa Clara-based company. The transaction closed in early 1996 through a stock exchange, with the final reported value exceeding $67.9 million. BusLogic's plant was retained for manufacturing, and Mylex's revenue reached $173 million in 1996. The company faced intensified competition and customer concentration risks. During 1996, Hewlett-Packard and IBM either pursued internal RAID-controller development or moved toward rival Adaptec, factors associated with a decline in Mylex's stock price. In July 1997, Mylex laid off 27 of its 397 employees and announced the planned closure of the former BusLogic facility. It later expanded research and development through a Boulder, Colorado, site. Mylex reported $135.7 million in revenue for 1998. IBM announced its acquisition of Mylex in July 1999 for approximately $240 million in cash. The deal closed in September, and Mylex became a wholly owned IBM subsidiary while retaining operations in Fremont and Boulder. IBM subsequently sold the Mylex division to LSI Logic in 2002 for an undisclosed sum. Completion in December 2002 transferred Mylex's assets and eight remaining Boulder employees into LSI Logic's Storage Systems division in Tucson, ending Mylex's independent corporate existence.
- 2002
Mylex division transferred to LSI Logic
[1]IBM completes the sale of the Mylex division to LSI Logic, ending Mylex's independent operation.
- 1999
Acquired by IBM
[1]IBM completes the purchase of Mylex for approximately $240 million in cash.
- 1996
BusLogic acquisition completed
[1]Mylex completes its acquisition of BusLogic, retaining its Santa Clara manufacturing facility.
- 1995
RAID market expansion
[1]Mylex reaches a reported 75 percent share of the RAID-controller market and exceeds $100 million in revenue.
- 1993
Pivot to RAID technology
[1]Mylex shifts its focus toward RAID controllers and LAN-management software for servers and workstations.
- 1988
Entry into PC motherboards
[1]The company begins offering complete motherboards for IBM-compatible computers.
- 1987
Headquarters move to Fremont
[1]Mylex relocates from Miami to Fremont, California.
- 1986
Leadership and ownership transition
[1]M. Akram Chowdry's investor group acquires a substantial stake, and Chowdry replaces Kyriakides as president and chairman.
- 1983
Mylex is founded
[1]Anastasios Kyriakides establishes Mylex in May to develop peripherals and expansion cards for the IBM PC market.
- 1983
Initial public offering
[1]Mylex files to go public and raises approximately $3.5 million.
Products and positioning
Mylex evolved from an IBM-PC peripheral and expansion-card supplier into a specialist provider of RAID controllers and server-storage technology.
PC expansion card
Chairman
A multifunction expansion card combining parallel communications capabilities with video-controller functions. It was among Mylex's early products for IBM Personal Computer systems and compatible machines.
Graphics adapter · 1986
Advanced Graphics Adapter
A Mylex-designed graphics adapter introduced for IBM PC users, particularly those working with computer-aided design and manufacturing. It used an Intel 80186-based design and supported color output at resolutions up to 800 by 600 pixels with compatible monitors.
Text-scanning peripheral
Text Wand
A handheld scanning product based on Mylex's scanner technology patent. It was designed to scan a line of printed text and use optical character recognition to transcribe it electronically.
Computer motherboard · 1988
IBM-compatible motherboards
Complete replacement motherboards for XT- and AT-class IBM-compatible computers. Mylex positioned these boards as upgrades using newer Intel 386, 386SX, and 486 processors, but sales remained limited and processor inventory later became obsolete.
Enterprise storage hardware · 1993
RAID controllers
Mylex's principal later product category, consisting of controller hardware for managing arrays of disk drives in servers and workstations. The product line became the company's strongest commercial business and was reported to hold a dominant market position by the mid-1990s.
Brand decisions
2002
Sale of Mylex division to LSI LogicM&ABackground
IBM decided to divest the Mylex division after owning it as a subsidiary for roughly three years.
Action taken
IBM sold the division to LSI Logic for an undisclosed amount, with completion in December 2002.
Aftermath
Mylex's assets and eight remaining Boulder employees moved into LSI Logic's Storage Systems division in Tucson, Arizona.
1999
Sale to IBMM&ABackground
Mylex had developed a substantial RAID-controller business but faced pressure from major customers developing products internally or moving to competitors.
Action taken
IBM agreed to acquire all of Mylex for approximately $240 million in cash and completed the transaction in September 1999.
Aftermath
Mylex became a wholly owned IBM subsidiary, retaining its Fremont and Boulder facilities.
Acquisition consideration. Approximately US$240 million in cash (1999)
1995
Acquisition of BusLogicM&ABackground
Mylex sought to strengthen its storage-related product portfolio and manufacturing capacity.
Action taken
The company announced a stock-swap acquisition of BusLogic in December 1995 and completed it in early 1996.
Aftermath
BusLogic's Santa Clara plant was retained, and Mylex revenue reached $173 million in 1996.
Reported transaction value. More than US$67.9 million after additional transaction terms (1995–1996)
1993
Shift from PC components to RAID and server storageStrategyBackground
Mylex's motherboard business was weak, and inventory losses related to obsolete processors had damaged results. The company sought a stronger position in the growing file-server and workstation market.
Action taken
Mylex redirected product development and sales toward RAID controllers and LAN-management software.
Aftermath
The pivot substantially improved the company's position. By the end of 1995, Mylex was reported to control about 75 percent of the RAID-controller market and had surpassed $100 million in revenue.
Recent events
- 2002
IBM sells the Mylex division to LSI Logic[1]
M&A
IBM transferred the Mylex division to LSI Logic. The transaction was completed in December, with the assets and remaining Boulder employees absorbed into LSI Logic's storage organization.
- 1999
IBM agrees to acquire Mylex[1]
M&A
IBM announced an agreement to purchase Mylex for approximately $240 million in cash. The transaction was completed in September 1999.
- 1995
Mylex announces BusLogic acquisition[1]
M&A
Mylex announced a stock-based acquisition of BusLogic, expanding its manufacturing and storage-technology capabilities.
- 1995
Mylex reaches a leading position in RAID controllers[1]
Other
By the end of 1995, Mylex was reported to control approximately 75 percent of the RAID-controller market and to have surpassed $100 million in revenue.
- 1986
Mylex changes leadership after sales decline[1]
Leadership change
After a sharp downturn linked to reduced orders from major customers, founder Anastasios Kyriakides surrendered part of his shareholding and was replaced as president and chairman by M. Akram Chowdry.
- 1983
Mylex files for an initial public offering[1]
Other
Soon after its founding, Mylex filed to become a public company and raised approximately $3.5 million through its offering.
Sources1 sources
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