NetWorth
| File:NetWorth logo.svg | |
| Company type | Public |
|---|---|
| Industry | Computer networking |
| Founded | January 1985 |
| Founders |
|
| Defunct | Template:End date and age |
| Fate | Acquired by Compaq |
Number of employees | 300 (1995, peak) |
NetWorth, Inc. was a U.S.-based manufacturer of computer networking hardware operating out of Irving, Texas from 1985 until 1995. The company focused on producing hubs tailored for Ethernet-enabled local area networks (LANs) and wide area networks (WANs), establishing itself as a significant rival to firms such as 3Com, SynOptics, and Cabletron. In 1995, Compaq acquired NetWorth for $372 million, incorporating it into their networking division.
Inception (1985–1986)
Established in January 1985 in Irving, Texas, by entrepreneurs John McHale and Gabriel Pugliese, NetWorth began as a design consulting enterprise. McHale, the lead founder, brought prior experience from Texas Instruments as a design engineer and from Interphase Corporation where he managed the networking product division. Pugliese, who also worked in Interphase’s networking quality assurance department, collaborated with McHale to initiate NetWorth. Shortly after inception, they pivoted towards creating proprietary networking hardware products. Both founders retained their roles at Interphase during the company’s initial phase, with McHale often dedicating up to 80 hours weekly to develop the startup.
vSERIES Development (1987–1989)
Following their departure from Interphase in 1986, NetWorth publicly introduced its first offering: vLAN, a network interface card that allowed IBM PCs to establish LANs over single-pair wiring. Production commenced in 1987 after securing investment from Ray Noorda, then CEO of Novell—the developer of the widely used NetWare operating system. Noorda’s backing facilitated a joint distribution arrangement and provided resources for patent licensing related to NetWare compatibility. In June 1987, the company released vLAN+, which improved data transmission speeds. Subsequently, in March 1988, they launched vNET Microchannel to support IBM’s proprietary Micro Channel bus architecture found in PS/2 machines. Collectively, these products were branded as the vSERIES.
EtherNext Product Line (1989–1992)
In February 1989, NetWorth unveiled EtherNext—a suite comprising network interface cards and stackable Ethernet hubs adhering to the emerging 10BASE-T standard for Ethernet over unshielded twisted pair cables. This line debuted commercially in June 1989 as one of the first products built on this soon-to-be formalized IEEE standard. By October 1990, NetWorth expanded its portfolio with the EtherNext Series 4000 network management system—an integrated hardware-software solution designed for monitoring and troubleshooting LANs running on NetWare. The Series 4000 featured rack-mountable chassis accommodating multiple 12-port 10BASE-T hubs alongside a Network Management Module capable of identifying cable faults and configuration errors at the IPX protocol layer.
After serving as vice president of marketing, McHale was promoted to president and CEO in 1989. The workforce grew swiftly from 23 employees at the start of 1990 to approximately 150 by late 1991. By mid-1991, over 85,000 units of their 10BASE-T products had been shipped globally. In December that year, networking pioneer Ungermann-Bass (UB) acquired a half interest in NetWorth aiming to capitalize on its market leadership in basic Ethernet hubs while cross-marketing UB’s sophisticated intelligent hubs to smaller enterprises. This alliance granted NetWorth rights to distribute UB products and collaborate on future innovations. Following this investment, NetWorth moved its headquarters into a substantially larger facility spanning 65,000 square feet near Dallas/Fort Worth International Airport to support expanded operations. Prior to UB’s involvement, Fibermux Corporation had briefly held a minority stake of 10% during 1989.
Expansion and acquisition (1992–1995)
In November 1992, NetWorth launched its initial public offering on the Nasdaq, with its stock price surging to $32 on the opening day of trading. Nevertheless, after posting a quarterly loss in April 1993, the share value dropped sharply by 43 percent, settling at $10.75, reflecting the unpredictable nature commonly associated with IPOs.
During 1994, NetWorth collaborated with IBM to serve as an original equipment manufacturer (OEM) for certain IBM networking products and enhanced its Dallas production capabilities by introducing a new surface-mount printed circuit board (PCB) assembly line. The subsequent year saw NetWorth’s only acquisition when it purchased Network Resources Corporation (NRC), based in San Francisco, California, for $22 million paid in both cash and stock. Despite this growth initiative, the fiscal year 1995 closed with revenues of $55 million but incurred a $24 million loss, largely due to the NRC acquisition costs and a discontinued research and development project that was written off.
In November 1995, Compaq revealed plans to acquire NetWorth through a stock exchange valued at $372 million. This move followed Compaq’s recent purchase of Thomas-Conrad, another networking company located in Austin. The transaction was finalized in December 1995, with Compaq absorbing NetWorth’s assets into its networking division and discontinuing the NetWorth brand name.
After selling NetWorth, founder McHale established a new networking enterprise called NetSpeed in February 1996. This company focused on manufacturing on-premises digital subscriber line (DSL) modems designed for broadband Internet connectivity. In 1998, NetSpeed was acquired by Cisco Systems.