Chapter 1
Data Communications: Emergence 1956-1968
Modems and Multiplexers
1.8 Codex and Milgo Become Public Companies 1968
By early 1968, Milgo management had reason to celebrate.
Their recently introduced 4400/48, priced at $5,885 each, proved to be
the first reliable 4800 bps modem to work over unconditioned, or minimally
conditioned, telephone lines. The 4400/48 was an instant hit. Investment
bankers began selling management on the idea of going public;
the market for technology stocks that had been so hot through
much of 1967 looked to be returning, and anything to do with
computers was certain to generate buying interest. Needing cash
to finance their growth, Milgo filed and went public in May 1968.
Their timing could not have been better. In the first month of
trading Milgo’s stock price doubled. Then in August, Milgo signed an
agreement with Racal Electronics, Limited (Racal), a United
Kingdom corporation, to sell Milgo modems internationally,
raising another $250,000. By October it had become clear that the data
communication business needed to stand on its own, and a wholly-owned
subsidiary, International Communications Corporation (ICC), was chartered
with three percent of the stock distributed to employees. (The convention will be to use Milgo, not
ICC, as the corporation name, for eventually that was to become industry
practice.) Modem sales for Milgo in 1968 would total $1.1 million,
second only to AT&T.
Fortunately for Codex management, the "feeding
frenzy" for the public stock of young technology companies continued
into the fall of 1968. With promises for the future more important than
current operating results, and with the performance of Milgo’s stock
on record, Codex went public on December 23, 1968, raising $2.1 million,
with a company post-money valuation of $12.5 million. The success of
the offering rested entirely with the excitement generated by the revolutionary
AE-96, not the low margin, unpredictable government R&D operations. Sales of $1.3 million for 1968, however,
included no modem sales.
