Terayon Plans $102M Offering

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Santa Clara, Calif. -- Cable-modem maker Terayon
Communications Systems Inc., enjoying a big run-up in its share price over the last two
months, is planning a secondary offering of up to 3.45 million shares.

The company plans to offer 1.75 million shares and existing
stockholders plan to sell the remaining 1.25 million shares. The total sale, at an
estimated $29.50 per share, would take in $102 million if underwriters sell 3 million
shares plus an over-allotment of 450,000 shares, according to Terayon's stock
registration statement.

As of Dec. 15, Terayon had just 16.4 million outstanding
shares. That number would rise to 18.1 million shares after the offering, according to the
registration statement. BT Alex. Brown Inc., Hambrecht & Quist LLC, Lehman Brothers
Inc. and Salomon Smith Barney Inc. are the underwriters.

Terayon went public in August at $13 per share and traded
in a range of about $7 to about $15 until the end of October. Since then, the share price
has risen strongly, closing at $35.88 on Dec. 24.

The proceeds that go to Terayon will be used for research
and development and to expand sales and marketing activities, the company said. Terayon
said it believes it will have enough cash to meet its capital requirements for the next 18
months.

Terayon had $18.8 million in revenue through the first nine
months of 1998, of which 32 percent came from Shaw Communications Inc. and 19 percent from
Cablevision Systems Corp.

Risk factors cited in the registration statement include
Terayon's need to cut its product costs, especially as cable modems move into retail
distribution, and a need to expand its customer base, especially as big cable operators
like Tele-Communications Inc. and Time Warner Cable already have other modem vendors.

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