Although Hummingbird Ltd. has rejected OpenText Corporation’s initial takeover offer of $27.75 per share, negotiations regarding a modified proposal for $27.85 per share, with fewer conditions than were attached to the original proposal, are ongoing.
The two companies hope to have a deal hammered out by this Sunday. Then again, as the lawyers say, it isn’t over until signatures are affixed to formal contractual documents.
Categories: M&A
Brix Networks — developer of service-assurance solutions, including monitoring tools, for telecommunications carriers, cable MSOs, and Internet service providers — has released a questionable, decidedly non-scientific study suggesting that the quality of VoIP calls is deteriorating.
The company analyzed data it gathered from its site called TestYourVoip.com, which was designed to allow consumers to test the quality of VoIP services. In its study, published Monday and covered today on CNET Networks’ News.com site, Brix alleged that call quality had declined five percent in the past 18 months. With almost one million VoIP connections tested through its website, Brix determined that 20 percent of all calls suffered from what it deemed unacceptable quality, an increase from the 15 percent of calls that it categorized as unacceptable last year.
Kaynam Hedayat, chief technology officer for Brix, attributed the decline in voice quality to the increasing contention for bandwidth on IP networks among various services, including voice, video, music downloads, and interactive gaming. His reasoning is that consumer consumption of Internet bandwidth is outstripping the availability of broadband bandwidth.
Said Hedayat:
“The network is ready for VoIP. But now that there are more services running over the same pipe, carriers need to differentiate packets and prioritize service.”
Well, not so fast. They are several problems with the Brix VoIP call-quality study, and I’ll try to address a few of them.
First of all, since Brix is sampling only self-directed queries to its TestYourVoip.com site, the sample methodology likely is skewed statistically. There’s a strong likelihood, in other words, that people already concerned about, or experiencing trouble with, their VoIP call quality would visit Brix’s site to corroborate their concerns.
Second, individual IP-based voice sessions do not consume excessive bandwidth. Voice sessions are sensitive to delay, but they are not bandwidth hogs, certainly nowhere near as voracious as streaming video or P2P file sharing.
Simply put, voice calls across IP networks don’t require prodigious bandwidth, though, yes, their quality could be affected by downstream contention for bandwidth against more demanding applications. Still, we’d have to possess a lot more data about access, metropolitan-area and core-backbone congestion before we could reasonably reach that conclusion. The Brix study provides no such data, and its mechanism for collecting data is more of an advertisement for its commercial services than an objective means of gathering relevant data.
Furthermore, we are inclined to wonder about Brix’s probable bias and about what motivated it to collect and publish this data.
From where, for instance, does Brix derive its revenues? If you examine its website, you’ll see that its customer references represent a veritable who’s who of the telecommunications and cable industries — including AT&T, Comcast, Verizon, Cox Communications, Telus, Cable & Wireless, Qwest, Sprint, Rogers Communications, Bell Canada, Telstra — plus notable Internet service providers such as EarthLink and AOL, which, of course, belongs to the not-so-peaceable kingdom of Time Warner.
There’s nothing like currying favor with your customer base, currently fighting net neutrality and campaigning for toll-based quality of service, to ensure that more business comes your way.
You can check out other reactions to the Brix pseudo-study at GigaOM and Techdirt. The comments at both sites are quite good and cover some of the same ground — and a whole lot more — that I addressed here.
Categories: Telecommunications · network infrastructure
Beating Cisco to the punch with an acquisition of a television- and video-on-demand (VOD) server company, Motorola today announced the acquisition of Broadbus Technologies Inc. for an undisclosed sum.
Cisco and Motorola both were said to be shopping for such an acquisition, but Motorola has made the first move, going from reactive to proactive mode in the adversarial relationship between the two rivals in the realm of content-delivery infrastructure for cable networks.
Despite Motorola’s reluctance to specify what it paid for Broadbus, an earlier report in Private Equity Week (PE Week) pegged the price at $186 million in cash. Motorola says the deal will close in September.
Broadbus is a considered a significant player in the television-on-demand market. Broadbus’ customers include cable providers Adelphia, Charter Communications, Comcast, Rogers Cable, and Time Warner Cable. The company had considered pursuing an IPO in 2007 or 2008, but it must have decided, given the uncertainty associated with long-term market conditions, that it was better to take the bird in hand than to wait for one to materialize on the public markets.
PE Week reported that Cisco – along with Intel – attempted to get involved in Broadbus’ early venture-capital rounds, but was rebuffed. Lately, Cisco is said to have turned its acquisitive attentions to Arroyo Video Solutions, which probably will come cheaper than Massachusetts-based Broadbus and is based in Pleasanton, not far from Cisco’s San Jose headquarters.
Broadbus raised $57 million in VC funding since its inception in 1999. The company has 130 employees, with offices in Beijing and Slough, England, as well as its Boxborough, Mass. home base. Toward the end of last year, Broadbus claimed to have more than 50 revenue-generating, commercial deployments of its VOD servers worldwide, passing more 10 million homes. At the time of the acquisition, it claimed 60 worldwide deployments.
Now the focus turns to Cisco, which is expected to respond imminently with a tit-for-tat acquisition of Arroyo. Analysts quoted recently in an article published by Cable Digital News see Arroyo as a logical target for Cisco. The company primarily is a software concern that runs its code on industry-standard hardware. It has Time Warner, Comcast, and Charter Communications among its stable of cable-industry customers.
Since Cisco already is well stocked with hardware, both its own and the infrastructure in acquired through its $7 billion purchase of Scientific-Atlanta, the consensus is that it would prefer to add video-on-demand software to its product portfolio instead of hardware.
More important, Cisco is seen to have an acute need for a VOD server. It doesn’t have one now, and it knows one will be required to serve the burgeoning market of cable MSOs and other broadband service providers looking to deploy IPTV. Heretofore a niche market, VOD servers are gaining increasing favor with both cable operators and telcos worldwide, particularly as the latter wake up to an “IP bundle deficit” in comparison to the MSOs.
Market watchers say further acquisitions in the VOD-server market are likely. There are two publicly traded players, SeaChange International and Concurrent, recognized as early market leaders, and they are followed by smaller vendors that include Arroyo, Broadbus, Harmonic, Kasenna, and Entone, among others.
That’s considered to be at least a few too many players. Fujitsu, Nortel, and Alcatel (though the latter has its hands full at the moment preparing for its muddle of equals with Lucent) have been mentioned as potential buyers of VOD-server players, and defensive mergers between existing players are possible.
Categories: Cisco · M&A · Motorola · Telecommunications · network infrastructure
In an interview broadcast last Friday on the Charlie Rose Show, Steve Case apologized for his role in the merger of Time Warner with AOL.
It was considerate of Case to voice his contrition, but he’s probably not half as sorry as AOL and Time Warner shareholders, who watched as their shares cratered and the merged company was decimated by its own missteps and the cruel vicissitudes of the Internet’s boom-and-bust market cycle.
While Case has moved on to become the founder, chairman, and CEO of Revolution, an investment vehicle dedicated to lifestyle-oriented consumer products and services, AOL is trying to metamorphose into a desirable online destination by making most of its online services free of charge rather than keeping them behind its dial-up, subscription-based walled garden.
Categories: AOL · M&A · The Media Landscape · Web 2.0
For a while now, I have been trying to discern Francisco Partners’ security strategy. The private-equity firm is putting together a portfolio of security investments — buying companies outright, making joint investments with other investment firms, or taking minority stakes — that seem to mesh well together and that hint at a bigger aspirations.
All the pieces aren’t in place yet, but Francisco Partners is working, on its own and in concert with Sequoia Capital, to assemble a group of security companies that are complementary to one another and that could be combined, in whole or in part, into a bigger entity at some point.
Francisco Partners added another security company to its stable this morning when it announced a definitive agreement to acquire WatchGuard Technologies in an all-cash transaction valued at approximately $151 million. WatchGuard has repositioned itself as a vendor of unified threat management (UTM) appliances for small- and medium-size enterprises. UTM appliances integrated a firewall, gateway antivirus, anti-spam and anti-spyware capabilities, intrusion prevention, URL filtering, and sometimes other features into one box. In buying a UTM product, the customer’s aim is to simplify management and reduce operational costs by having all its security requirements addressed by one device.
Thus far, the UTM pitch has found more favor in medium and small enterprises than in larger companies, primarily because larger enterprises already have made sizeable investments in each of those areas and generally subscribe to the thinking that a jack of all trades must be a master of none.
Before acquiring WatchGuard, Francisco Partners made the following moves in security:
Last summer we learned that Francisco Partners might be interested in buying Hewlett-Packard’s ProCurve networking unit, which ranks second or third in Ethernet-switch market share (depending on the quarter and who provides the market data). ProCurve is miles behind Cisco, as are all the other enterprise-networking vendors, but it has a chance to position itself as an alternative to Cisco’s enterprise-networking juggernaut. HP’s ProCurve unit also incorporates a virus-throttling technology into its switches that might fold comfortably into a larger secure-networking strategy value proposition, one that encompassed UTM technology and comprehensive messaging security.
Many observers expected HP to sell off its ProCurve business unit after Mark Hurd and his team of relentless technocrats took charge. So far, though, HP hasn’t divested its enterprise-networking group, which is perceived by many within HP as a distraction that prevents HP from honing its focus on its core competencies. Then again, HP’s growing emphasis on secure storage, and the networking surrounding, might be giving the company pause about unloading ProCurve.
Maybe a decision has been made at HP, and perhaps the company has chosen to keep ProCurve. If it doesn’t, though, it’s a safe bet that Francisco Partners will be among the first to make inquiries.
Categories: Cisco · Hewlett Packard · Internet Security · M&A · Private Equity
