CDX Liquidating Trst v. Venrock Assc, et al

Filing 244

MOTION by Entity Defendants J.P. Morgan Partners (BHCA) LLP, Chase Equity Associates, LLC, and Hambrecht & Quist California, et al. for judgment as a matter of law pursuant to FRCP 50(A) (Attachments: # 1 Exhibit A (JTX 238), # 2 Exhibit B (DX 388), # 3 Exhibit C (DX 436), # 4 Exhibit D (JTX 186), # 5 Exhibit E (PX 131), # 6 Exhibit F (JTX 299))(Rammelt, David) (Text modified on 3/16/2010 (vmj, ).

EXHIBIT D
(JTX 186)

To Motion of Entity Defendants J.P. Morgan Partners (BHCA) LLP, Chase Equity Associates, LLC, and Hambrecht & Quist California, et al for Judgment as a Matter Of Law Pursuant to FRCP 50(A)

From: Sent: To: Subject:

Walker, Charlie Thursday, October 26, 2000 6:54 PM Oppenheimer, Stephan; Soghikian, Shahan FW: Information from Cadant

Financial Cost Breakdown Investor Corporate Executive Summary ~formation Next Rou Next Round Finn... esentation 10-O0.pl~adership.doc (38 K. Septmeber 20...

..... Original Hessage ..... From: Johnson, Kevin [mailto:[e-mail]] Sent: Wednesday, October 25, 2000 2:28 PM To: Charlie Walker (E-mail) Subject: Information from Cadant
<<Financial Information Next Round.xls>> <<Cost Breakdown Next Round Financing.xls>> <<Investor £resentation 10-00.ppt>> <<Corporate Leadership.doc>> <<Executive Su~nary Septmeber 2000.doc>>

JTX 0186
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B Cadant, Inc. Revenue, COGS & Inventory Forecast

D ASSUMPTIONS C4 CMTS Additional Cards D-CARDS E-CARDS F-C, ARDS M CARDS

E

8 9 10 UNIT SALES 11 12 C4 CMTS 13 D-CARDS 14 E4~ARDS 15 F-CARDS 16 M-CARDS 17 OTHER 18 19 TOTALS (ALL PRODUCTS) 20 21 REVENUES 22 23 C4 CMTS 24 D4~ARDS 25 Ea~ARDS 26 F-CARDS 27 M-CARDS 28 OTHER 29 30 31 GROSS REVENUES 32 33 COST OFSALES 34 35 C4 CMTS 36 D-CARDS 37 E4~ARDS 38 F-CARDS 39 M-CARDS 40 OTHER 41 42 Total Cost at Sales 43

($000 except unit price & cost) Aug-O0
Sep-OC

44

The information contained herein is Cadant Proprietary & Confidential All estimates presented here are based on lhe industry market opportunity as well as internal planning by Cadant Sales & Marketing Team and are subject to change without notice. Please request authorization I~om Cadant pder to dislributicn of this information

45

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S 1 2 4 5 6 7 8 9
10 12 Oct-O0 Nov-O0! Dec-OOi !UNIT PRICE ~ UNIT COST ~ ~ I 70,854.43 4,470.15 6,668.50 4,674.4O

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Nov-01 70

Dec-01 88

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1,417

1,559

1,701

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6,235

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9 1.~..0 2091 11 364 12 13 14 15 16 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 4O 41 42 43 44 25,791 90,792 188,070 25,791 79,869 3,641 2,427 2,427 2,427 154,244 11,275 7,517 7,517 7,517 43,680 43,680 135,267 9,009 6,006 6,006 6,006 162,294 344,925 261,229 27,899 18,599 18,599 18,599 / 2002 1,127 546 364 364 364 2003 2,177 1,691 1,127 1,127 1,127

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Corporate Leadership Management Team
CEO CTO Controller VP - Engineering VP- Marketing & Product Mgt Board of Directors Venkata Majeti Eric Copeland Mark Rochkind Jay Vohra Randy Lyon CEO General Partner, Venrock Assoc Exeter Lane Assoc President & CEO, Isourcing Managing Director, J.P. Morgan 630-799-1250 650-561-9079 973-538-559~ 312-345-1022 312-541-3370 Venkata Majeti Tom Cloonan Kevin Johnson Dan Hickey Gene Rosendale

630-79%1250 630-799-1286 630-955-9840 630-799-1287 630-955-9840

[e-mail] tom @ cadant.com kjohnson@ cadant.com [e-mail] gene@cadant, com

.e.5.c~ ~! _~ _n..r.~?_ _c_k_ =.Q2 _M mrochkind @ worldnet.att.net in tk~ @isourcin ~, [e-mail]

Technical Advisory Board

Stephen Dukes (Chaim~an) David Bukovinsky Walter Ciciora
Steve Craddock Nick HamiltonPiercy

Former VP, Engineering, MediaOne VP, Engineering, Wild Blue Former, CTO, Time Warner Cable VP, Engineering, Comcast VP, Engineering, Rogers Cable

303-858-3285

stephandukes @ mindspring.com

720-554-74~) dbukovinskv@ isk v net 203-259-5183 wciciora@ aol.com 215-981-78J8 [e-mail] 416-935-48}8 [e-mail]

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Company Overview:

Cadant, founded in May 1998 and located in Lisle, Illinois is a leading developer of next-generation multiservice IP-based cable modem termination systems ("CMTS"). The Company currently has approximately 110 employees, 80 of whom are engineers. ]'he Company has successfully developed an advanced nextgeneration cable networking solution called the C4 to provide more reliable service and enhanced offerings to cable subscribers. C4 provisions a higher degree of integration and performance with features such as flow control, scheduling, and policing, to allow simultaneous transmission of voice, data and video. The C4 is a high-density system that is capable of 128 upstream channels and 32 downstream channels per chassis. The product is capable of sending and receiving voice and data packets over cable in compliance with CableLabs' DOCSIS v1.1 standard. DOCSIS v1.1 optimizes cable bandwidth utilization and supports multiple classes ot service as well as real-time service flows needed for applications such as voice and streaming video. The C4 is also compliant with PacketCabte 1,0, which is necessary to qualify for carrier-class VolP services, At present, the Company intends to begin trials with multiple system operators ("MSO") in the fourth quarler of 2000. The next-generation CMTS industry is poised for considerable growth as cable network operators continue to aggressively upgrade their hybrid fiber coaxial ("HFC") infrastructure to complete the two-way cable build-out. About 45% of the cable plant has already been upgraded to HFC. During 1999, there was $340 million in revenue generated from CMTS shipments worldwide, representing 170% growth rate over the previous year. According to Dataquest, worldwide revenue for the CMTS equipment market is expected to grow to more than $2.5 billion by the end of 2003. This significant industry growth is in response to several factors: MSO migration to standards-based equipment: ¯ MSO migration toward standards-based equipment has accelerated as companies such as MediaOne and Cox Communications complete their overlay of DOCSIS-based systems to eliminate capacity constraints. In light of aggressive positions of many ~LECs and LECs in utilizing DSL and fixed wireless based technologies, cable operators must implement DOCSIS based systems to capture and maintain market share for video and enhanced services.

Industry Background:

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Advanced service offerings: ¯ Previous generation proprietary CMTS systems lack many of the capabilities of the newer systems with respect to security, interoperability, bandwidth, downstream and upstream data rates, packet processing power and automated self-provisio~ning. MSOs are looking for better ways to compete against insurgents ranging from satellite TV to ISPs.

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Growth in cable modem shipments: ¯ ¯ Cable modem shipments to PCs totaled approximately 3 million units in 1999 and are forecasted to grow to more 12.6 million by year-end 2004, according to Gartner Group. The number of total homes passed by cable TV systems in North America in 1999 was about 97 million, and homes passed by cable data services approached about 65 million.

Competitive Pricing: ¯ Significantly lower prices for standard-based cable modems.

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Manaqement And Emplovees:

The Company has approximately 110 employees, 80 of whom are engineers. The 80 engineers have an average of 18 years of experience in cable, telecom, gigabit ATM, and router technology from leading technology companies such as Lucent Technologies, Bell Labs, Westell Technologies, U.S. Robotics, Motorola and Cisco Systems, among others.
19 Patents pending for technology developments.

Innovation: Sustained Rapid Growth:

The Company is at the forefront of the DOCSIS-based CMTS industry, which is expected to reach nearly $2.5 billion by 2003, according to Dataquest. The Company believes that its product oflering is superior because it provisions a higher degree of integration and performance with features such as flow control, scheduling, and policing, to allow simultaneous transmission ol voice, data and video. As a result, the Company believes that by 2003 it will capture 30% of the total CMTS market share. Additionally, the Company intends on to invest a substantial amount of time and resources to develop derivative products in fixed wireless and DSL. The Company expects to be the first-to-market supplier of DOCSIS vl. 1 compliant CMTS systems. Standard open interface and protocols allow for seamless integration and performance in compliance with DOCSIS 1.t standards.

DOCSIS 1.1 Certification:
Product Capability:

DOCSIS v1.1: MSO migration toward standards-based equipment has accelerated as companies such as MediaOne and Cox Communications comp/ete their oveday of DOCSIS-based systems to eliminate capacity constraints. Scalability: The C4 supports subscriber growth with the highest density and scalability offered in the industry with a standard rack carrying 3 chassis capable of 128 upstream and 32 downstream channels per chassis. The C4 is able to offer open access to over 4,000 ISP, ASP and Virtual Private Network operators. Quality of Service ("QoS"): Fully compliant with QoS as governed by DOCSIS 1.1 limiting issues such as latency, echo, jitter and lost packets. Uniquely designed to sustain any system component failure without interruption of sewice providing for true carrier-class availability with 99.999% uptime. Advanced Packet Processing: Enhanced capabilities in packet processing including flow-based classification and prioritization; flow-based policing; hard and soft-limiting flow control; [WRED] congestion control based on flow priority and flow activity; fine-grain congestion control technique containing over 70 tunable parameters; priority-based queuing; priority-based scheduling; extensive layer 2, 3, and 4 filtering; priority-marking gatekeeper; billing and performance monitoring counts; and traffic shaping for VolP and streaming video flows. System Management: Powerful system management capabilities simplify installation, monitoring, and overall system administration. Relationship with MSOs: DOCSIS Standard: The Company has primarily targeted, and is in various levels of discussion with, the top seven US MSOs, which cover 80% of the total homes passed by cable. Docsis vl.0 established universal ground rules for the transmission of packets across cable networks, ensuring that packets will be routed correctly. DOCSIS vl.0 has been enhanced in DOCSIS v1.1 with quality of service ("QoS") features that enable the prioritization of packet traffic and security features that are necessary for voice communication. This allows cable operators to give voice packets the right of way and allows other traffic to be sent with a best-efforts priority as determined by bandwidth availability.

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Competitive Overview: CMTS products are offered by 3Corn, Cabletron, Cisco, Com21, Motorola, Nortel Networks/Arris Interactive and Terayon. Broadband Access Systems, River Delta Networks and BigBand Networks are private companies that are also developing CMTS products. Cisco Systems, Cadant, Broadband Access Systems and River Delta Networks are developing products which are DOCSIS compliant. However, Cadant and River Delta Networks are the only companies developing products which are DOCSIS v1.1 compliant. The Iollowing profiles highlight the primary CMTS product vendors: Nortel Networks/Arris Interactive Arris is a joint venture between Nortel Networks and ANTEC Corp. The Company is built on the strength of its parent companies in the development of ne~t-generation integrated broadband networks, coupled with strong relationships with both US and Canadian MSOs. The Companies CMTS product, the Cornerstone CMTS 1000 is in full compliance with DOCSIS vl.0 standard and has proven performance with more than 25 cable operators in 42 cities and f ! global markets. The Cornerstone provides two downstream and eight upstream channels. BigBand Networks E~igBand Networks is a leading provider of a new class CMTS solution that enable service providers to deliver and manage differentiated and interactive services combining video, audio and data. BigBand Networks' patented NativeMediaTM technology architecture is based on the distribution and management of media in its original forms, which results in unprecedented quality, functionality, scalability and efficient use of bandwidth. Broadband Access Systems ("BAS") BAS has established itself as a leading developer and supplier of next-generation CMTS equipment. The company's revolutionary CMTS, called the Cuda 12000, is NEBS and DOCSIS vl.0 compliant, and is designed to support future upgrade requirements, The Cuda has been commercially available in limited quantities since 1he fall of 1999. The Cuda is differentiated by its distributed routing architecture that places a high-powered processor directly on each CMTS card capable of delivering up to 42 million packets per second on a fully loaded chassis. This feature allows the device to maintain wire-speed packet forwarding as service penetration and complexity grows. Time Warner and Adelphia have begun deploying the Cuda in their networks, while field trials are underway with numerous other operators worldwide. On September 20, 2000, ADC Talecommunications announced that were planning on acquiring BAS for $2.25 billion in stock. Cisco Cisco Systems' CMTS product, the uBR 7246, was the first-to-market DOCSIS v1.0 system. As a result, the Company has captured almost 75% of all upstream and downstream CMTS port shipments and established credibility and long-term relationships with numerous MSOs. The Company's CMTS product supports Time Warner, AT&T, Media One, Cox and Comcast, among others. ,&]though Cisco's early presence has allowed them to capture a majority o! the market share, their current CMTS product trails numerous private companies, such as BAS, Cadant and River Delta, in overall performance. River Delta Networks River Delta's CMTS product, the BSR 64000, is [DOCSIS vl.0 compliant], and is designed to support future upgrade requirements. The BSR 64000 allows for per-flow policing and traffic shaping at wirespeed. A key differentiating feature of the BSR 64000 is that as traffic volumes grow, cable operators can deploy it at their distribution hubs rather than at a cable head end in order to get greater numbers of streams to customers. The BSR 64000 is currently in two beta trials with customer shipments due in the fourth quarter.

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