dialogic

2008 Year in Review: Consolidation in the IP communications industry

Doug Mohney — Mon, 22 Dec 2008 10:21:36 -0500

At press time, we await the official word from BroadSoft on its acquisition of Sylantro, an end-of-year cap to a steady stream of deals that took place over the course of 2008.

A good chunk of this year's M&A activity was driven by tightening credit (see BroadSoft/Sylantro). Investors were unwilling to throw more money at companies that didn't appear to have any hope of breaking black anytime soon, forcing a number of companies to find a marriage before they ended up in bankruptcy proceedings.

Cisco and Oracle continued their devouring ways, while Dialogic and GENBAND pursued their business strategies of growth through rollups. Looking back, we were a bit surprised by EXFO getting into the acquisition game, but we can't argue with who they brought.

If Santa is looking for something to put in the FierceVoIP stocking on December 25, it's the story behind the GENBAND/NextPoint acquisition. How much did GENBAND pay for the company? Did Dialogic pursue NextPoint and bow out due to the price tag? Were there any other suitors for NextPoint?

The biggest curveball out of 2008 was the out-of-nowhere purchase of VoIP and Video SIP service provider SightSpeed by PC-peripheral manufacturer Logitech. But we understand why the combination of video technology development expertise and recurring revenues would be attractive. Combine SightSpeed's service with Logitech's potential for global marketing to make for some interesting growth potential.

Jabber punches up Cisco's UC effort - FierceTelecom
GENBAND adds NextPoint - FierceTelecom
BroadSoft acquiring Sylantro - The impact - FierceVoIP
EXFO to acquire IPTV tester Brix Networks - FierceTelecom
Dialogic devours NMS hardware biz - FierceTelecom
Dialogic Corporation Acquires OpenMediaLabs' Business
Logitech buys SightSpeed for $30M - FierceVoIP
Green Wednesday - VoIP mergers and acquisitions of 2008

Which VoIP companies are up for sale now? Which aren't?

Doug Mohney — Mon, 17 Nov 2008 09:42:35 -0500

VoIP companies that (likely) aren't for sale

You can never say never, but anyone who has managed to take down another round of venture capital money since September is unlikely to take a quick buyout offer. Their backers are happy with the existing business model and have enough faith in both the potential upside and current management to wait out the storm for the next couple of years.

So you can put Intelepeer and iSkoot on the "unlikely" list for the next 12 months. But never say never.

VoIP companies likely for sale

Conversely, anyone who "Never says never" too loudly is worth looking at again. Plunging stock prices, antsy investors (both public and private), and an atmosphere of fear will provide the catalyst for a number of deals - good and bad - in 2009.

(Pieces of) Alcatel-Lucent

With a new leadership team and new organization coming in place on Jan. 1, 2009, Alca-Lu may want to shed and/or spin-out one or more divisions and/or product lines. We're sure Dialogic and GENBAND are looking over what might be applicable and available.

AudioCodes

Publicly-traded AudioCodes could prove to be an attractive buy for any number of hardware companies, due to its core technology, professed love for HD and abundance of fun partnerships. At a market cap of $78 million at the close of business on November 14, the price might be right, followed by some divesture/spin-down of existing assets.

(Pieces of) Nortel

Nortel might need more cash faster, because we don't think the $1 billion asking price for the Metro Ethernet division is going to happen anytime soon. Given they let go of a lot of people in the executive suite earlier this month, existing shareholders are going to press for more rapid and drastic changes to go with the planned job cuts.

New executives might be tempted to chainsaw the company down - especially if there is a new CEO in the first quarter of '09.

SimpleSignal

It's a hosting/SaaS play, it has a lot of good technology and the company continues to generate a steady stream of Fierce ideas, as evidenced by its appearance on the Fierce 15. Could we see them?

Vonage

At close of business on November, 14, Vonage had a market cap of $139 million and change. It almost seems to be begging for someone to come in, buy them up, and put a stake through the heart of its marketing expenses. A larger phone or cable company could conceivably roll them into existing marketing operations. But the buyer would have to be a serious Net Neutrality lover.

However, what would be a reasonable offer for the company when you toss in that $253 million of senior secured debt?

Yahoo

The ever-declining Yahoo does have the whole IM and voice services thing going on. If the stock price continues to drop, both Google and Microsoft are bound to take another look at the company. We also wouldn't be surprised to see a Fierce play by Verizon or another carrier.

Shoppers: Possible VoIP merger and acquisitions in 2009?

Doug Mohney — Mon, 17 Nov 2008 09:36:21 -0500

Apple

Would Apple buy Yahoo? At less than $11 a share and a market cap of $15 million it may be a target too tempting to resist. We could also see Mr. Jobs make a quick strike or two for software and/or HD audio technology.

BroadSoft

Sources tell us BroadSoft quietly secured some amount of venture capital in September, disconcerting staff who had been told last year that the company wasn't going to take another round.

Last week, Tessler told FierceVoip, "We always carefully consider opportunities for consolidation, but we want to stay in the applications layer and have been very clear that we won't go beneath that in the stack. Of course, in this climate, something may present itself as a must-take opportunity."

We're not sure if SaaS/hosted companies fall into the above definition, but being able to acquire recurring monthly revenues is always a good thing for any company.

Cisco

Do we need to explain further? Cisco may be trimming up its expenses, but it has plenty of free cash coming in quarter after quarter and an appetite for devouring companies. We wouldn't be surprised if Cisco reached deep into its wallet to make one big (multi-billion dollar) deal in 2009.

Dialogic

Dialogic wants to be a company with at least $400 million in sales, so we expect them to steadily add to the portfolio in 2009 with at least one player "consolidated" under the Dialogic flag.

EXFO

After buying Brix Networks and Navtel this year, what else is there left to buy in the testing and service assurances market? Maybe a SaaS play to get recurring revenue.

GENBAND

Nortel's Ethernet and optical networking assets may represent an opportunity for GENBAND to move beyond its IMS core strategy. Or not - Nortel wants a billion, it will "only" get $500 million.

Regardless, GENBAND doesn't mind buying up individual divisions of companies, and a number of vendors will want to tighten up their portfolios.

Dialogic and GENBAND

Could the two M&A kings end up together to build a potential billion dollar baby? It'd be an interesting marriage with Dialogic at the edge and GENBAND at the core.

Global Crossing

The company told the Wall Street Journal it was interested in possible mergers and acquisitions to gain scale, as they expect a new wave of consolidation in the next 18 months. CEO John Legere said the company has been "in talks with everyone" - whatever that means.

Who do you cross Global Crossing with? Given their all-IP religion, a pairing with XO might make sense, giving GC a bigger U.S. presence and a large metro network. Another interesting combination might be a merger with one of the top three CDN players - Akamai, Limelight or CDNetworks. CDNs need cheap pipe, while GC and other long-hauls would like to accumulate more peering relationships and more IP traffic.

Google

If it's a slow news day, Google will likely buy a VoIP/IP communications company it thinks is hot, then sit on it for about 12 to 24 months while it figures out what to do with the acquisition. At least the company being bought will likely see cash, rather than stock, unless it's a mega-deal.

Microsoft

With $17.8 billion in cash on the books and no publically professed interest in Yahoo this minute (If Yahoo was such a great deal at $31 a share, why wouldn't be an excellent deal at $11 a share? Probably because Microsoft could afford to wait until Yahoo hits $5-7 a share before rolling back in), Microsoft has plenty of cash and a decent stock to offer young UC companies an offer they just can't refuse.

2008 VoIP best buy of the year

Doug Mohney — Mon, 17 Nov 2008 09:17:10 -0500

GENBAND grabbing NextPoint

Why: GENBAND wanted SBC and DPI technology. NextPoint was the largest non-public company available in the SBC space. The only open question is if GENBAND paid list price or a discount. Over the summer, it was obvious to everyone that NextPoint was on the block, but was NextPoint's technology portfolio original enough to pull top dollar?

Runner-up: Citrix Systems buying Vapps

Why: Looks like a win-win for everyone. Citrix gets a managed, HD voice conferencing service, so they get both managed services (more revenue) and HD technology (wave of the future); Vapps also supports Skype - the Apple Mac of VoIP technology. Citrix can meld Vapps's service into its existing GoToMeetings.com service. Vapps gets $26.6 million, plus another $4.4 million in earnouts if it hits its goals. And venture investor Azure Capital Partners gets a 3.6 times return on the investment it made 18 months ago, which will be important given the present financial situation.

Runner-up: EXFO buys Brix Networks

Brix just made good stuff, which is never a bad sign for an acquisition.

Runner-up: Dialogic acquiring NMS Communications

Why: We didn't see it coming, but it makes a lot of sense. Dialogic gets a solid foothold into the mobile space and can put its video technology onto NMS hardware with a quicker time to market, and Dialogic also gains the ability to leverage NMS's existing customer relationships in the mobile space. It also liberates fast-growing, services-oriented LiveWire Mobile out of the (legacy) hardware business.

Who's buying? Significant VoIP M&A shoppers of 2008

Doug Mohney — Mon, 17 Nov 2008 09:12:23 -0500

You shouldn't be surprised to hear these names when it comes to snapping up smaller companies or even engineering larger deals.

Cisco

Notable acquisitions this year: Jabber, PostPath, Pure Networks; investment in ip.access.

Why do in-house R&D (the ASR 9000 zettabyte router being a notable exception) when you can just let someone else do the hard work of building a product, working out the bugs and establishing market viability?

Or, if you wake up feeling particularly Fierce, take some of that $26 billion in cold cash and go buy somebody, big, really, really Big. Cisco has been cranking cash flow at a clip of around $2 billion a quarter. Even if that slows down due to a sluggish economy, there's still a nice happy money stream to do whatever it pleases.

This year Cisco bought Jabber and PostPath to beef up its collaboration portfolio. Jabber brings presence and messaging software expertise for embedding those attributes "in the network," including WebEx Connect and Cisco UC offerings. PostPath will enhance the existing email and calendaring capabilities of WebEx Connect.

We'll toss in brownie points for investing in ip.access (Femtocells) and picking up Pure Networks (Home network management software that will likely have a VoIP hook to it in the near future).

Dialogic

Notable acquisitions this year: Open Media Labs, NMS Communications

Love the Nick Jensen.

Dialogic's CEO tells you what he is going to do, then goes out and does it. Jensen was practically rubbing his hands together in glee as the credit markets started to tighten up this spring, driving down valuations. He wants to buy good assets at the best price he can get, so long as they fit into his master plan of A) Adding more revenue and profit to the bottom line, and/or B) strategically building his technology and customer base.

At an analyst/press meeting last year, Jensen said the future is video. This year, Jensen showed up with Open Media Labs in tow and said he was interested in acquiring SBC and DPI technology. We suspect he took a pass on obvious buy NextPoint because the price tag was too high for what was there, and instead worked a deal with NMS Communications to open up Dialogic's reach into the mobile/wireless space.

EXFO

Notable acquisitions this year: Brix Networks, Navtel Communications

By purchasing Brix and Navtel, EXFO has gone "up stack" from hardware to networking and applications testing and service assurance solutions. Navtel brought on board IMS, VoIP and GMPLS test solutions, while Brix had a broader story (and more key customers) in the business of VoIP and IPTV data services. Brix also had a great story with the end-user QoS/QoE experience.

GENBAND

Notable acquisitions this year: NextPoint networks

We sang praises for GENBAND in the Fierce 15. This was a slow year for GENBAND buying, as compared to 2007, but when it bought, it bought what it needed. Acquiring NextPoint gives deep packet inspection (DPI) and session border control (SBC) technology to the company to implement on its boxes. Adding new security capability on existing GENBAND open standards-based hardware should be a simple code load.

Oracle

Notable acquisitions this year: BEA Systems.

After devouring BEA for $7.2 billion (net) early this year, Oracle has been pretty quiet on the acquisition front. Among BEA's assets are the WebLogic communications platform family, so there's a lot of nice middleware that can snuggle up to an Oracle database, including presence, virtual PBX, call management, routing and the all-important billing functions.

Dialogic, Top VoIP Company 2008: FierceVoIP, Fierce15

Mon, 03 Nov 2008 16:31:57 -0500

Dialogic

Where it's based: Montreal, Quebec
When it was founded: 1984 (Eicon)
Website: www.dialogic.com

Why it's Fierce: Under the leadership of CEO Nick Jensen, Dialogic has been devouring equipment companies at a steady clip. The portfolio includes the original parent company Eicon, Intel's media and signaling business (where the original Dialogic brand resided), Cantata Technologies (a company built by mergers of Brooktrout, Excel, and SnowShore), OpenMediaLabs for its video expertise and the NMS Communications Platform business.

Dialogic sees itself as selling the building blocks for applications at the network edge, not in the applications business per say, with video is a key path for future growth. If you think Cisco has a good video story, you'll love Jensen's vision of video-enabled gaming, video SMS, video ringtones, video IVR, video call center applications and mobile video conferencing.

Don't be surprised to see Dialogic buy up a few more companies over the next twelve months. Jensen has a taste for bargains - if they fit into his master plan. Finally, you just have to love a privately-owned company that understands the value of yearly dedicated analyst/media events. It's a practice that many could learn from.

Who dares wins, M&A style

Doug Mohney — Thu, 18 Sep 2008 11:04:27 -0400

As I pack my bags for the West Coast, I can't help but admire the consolidation machines of Dialogic and GENBAND.

In his column this week, Carl Ford goes deeper into Dialogic's acquisition of NMS's hardware business and the deal makes sense for both sides. Dialogic CEO Nick Jensen gets more of that video story he craves and a built-in customer for hardware (LiveWire Mobile). It's a solid deal for Dialogic.

GENBAND's purchase of NextPoint was, perhaps, an inevitable transaction. Like Dialogic, GENBAND was shopping for SBC and DPI technology. I suspect, unlike Dialogic, GENBAND was willing to pay a "premium" for NextPoint's share of the SBC market. With 17 percent market share, NextPoint comes in as the second largest player, with Acme Packet dominating the SBC field with over/around 50 percent.

Exactly how much GENBAND paid is an interesting question. I doubt that it was a dollar-for-dollar match compared to the amount of venture money put into the piece parts of NextPoint over the years. And it was no big secret that NextPoint had pared itself down over the summer in order to be acquired.

And then there's Nortel. A couple of weeks ago, it bought Pingtel for a song. Now it's out to sell its Metro Ethernet division. Let's see what happens next. Nortel may end up shedding more hardware by the time the smoke clears, but I wouldn't put it past them to pick up more software-based assets moving forward.

- Doug

P.S. - I'll be in Phoenix for AstriCon on September 24 and 25. Be interesting to see what Digium has in store at its annual love-in.

Broadvox adds Dialogic to SIP trunking lineup

Doug Mohney — Sun, 29 Jun 2008 19:43:22 -0400

Broadvox and Dialogic announced that the former's GO! SIP trunking solution was interoperable with the latter's 2000 Media Gateway Series; it is Broadvox's third SIP trunking interop announcement in a month's time.

The Dialogic/Broadvox partnership provides a solution for the SMB and enterprise markets looking to ditch their legacy PBX and key phone systems with a more cost effective SIP trunking solution. The Dialogic 2000 Media Gateway Series is a 1U form factor box and can take anywhere from 1 to 4 T1/E1s at a time. Broadvox's SIP trunking services can provide up to 70 percent cost savings when compared to traditional pricing and service options include DIDs and local number portability.

Broadvox has also announced interoperability partnerships with Sutus and Epic Systems. GO! SIP trunking has been certified with Sutus' all-in-one Business Central, a device designed for SMBs with under 25 employees. Epic Systems offers a low-cost IP PBX capable of supporting up to 30 extensions and 10 simultaneous calls.

For more
- Broadvox announcement of Dialogic SIP trunking compatibility

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