& cplSiteName &

ECI to Buy Laurel for $88M

Light Reading
Supercomm News Analysis
Light Reading
5/16/2005
50%
50%

ECI Telecom Ltd. (Nasdaq/NM: ECIL) is to buy B-RAS vendor Laurel Networks Inc. for $88 million in cash (see ECI Buys Laurel Networks).

Today's announcement follows months of negotiations that Light Reading believes were concluded early last week (see ECI Closing in on Laurel). The deal, expected to close within a few weeks, brings Laurel's technology, 150 staff, and $9 million in cash, giving the deal a $79 million net worth.

That's just more than four times Laurel's 2004 revenues of $18 million, derived from customers such as Level 3 Communications Inc. (Nasdaq: LVLT) and Korean carriers Dacom Corp. and KT Corp. (Korea Telecom), among others (see Laurel Scores at Level 3, Laurel Dates Dacom, Laurel Wraps Up KT Deal, and Laurel Lands Grande Deal ).

The move also represents ECI's latest attempt to challenge the industry's larger vendors. The company knows it needs to ramp up its IP capabilities if it is to win large carrier deals in competition with the likes of Alcatel (NYSE: ALA; Paris: CGEP:PA), Cisco Systems Inc. (Nasdaq: CSCO), Huawei Technologies Co. Ltd., and Siemens Communications Group, and has been vocal about its plans to acquire additional capabilities (see ECI Lines Up Acquisitions).

Late last year ECI invested in core IP router vendor Chiaro Networks Inc., and a full takeover looks likely (see Chiaro Lands ECI Investment). The acquisition of Laurel will give ECI an edge router with broadband remote access server (B-RAS) capabilities it can offer in conjunction with its Hi-Focus multiservice access gateway (see Laurel Joins B-RAS Pack, Laurel Steps Up on the Edge, and ECI Extends Broadband Access Portfolio). In addition, Laurel has recently been promoting its technology as video-friendly in an effort to attract carriers looking to provide IP video and IPTV services (see Laurel Pumps Up IPTV Plans). That will fit neatly into ECI's plans to target operators planning triple-play (voice, video, and data) service bundles.

ECI executives weren't immediately available to talk about the acquisition or about where else ECI might turn its M&A attentions. The company will hold a conference call regarding the Laurel acquisition at 3pm Eastern Standard Time (EST).

The deal appears to have come just in time for Laurel, which has only $9 million left in the bank. Without the acquisition, it could have ended up on the B-RAS scrapheap, or been bought for peanuts -- a fate that has befallen several other B-RAS players (see Tut to Acquire Copper Mountain and Tut's CoSine Deal Drags On).

That situation will likely have helped ECI broker a price that falls below Laurel's total funding to date, and is much lower than the $200 million-plus that some VCs had predicted. Laurel has raised $118 million in backing, including funds from venture capitalists and equipment vendor Ciena Corp. (Nasdaq: CIEN), which has been reselling Laurel's gear (see Ciena Takes Stake in Laurel and Ciena, Laurel Win in Spain).

Investors and carriers will want to know what will come of that relationship, and Laurel's current partnership with Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), a head-to-head rival of ECI in the optical and access markets (see Laurel & Marconi Make It Official).

Heavy Reading analyst at large Graham Beniston believes there's little downside to this deal, and that ECI is acquiring a company with "very creditable technology. It leads many of the other B-RAS vendors in terms of scaleability." Adds Beniston, "This gives ECI a solution set to challenge the Marconis of this world."

— Ray Le Maistre, International News Editor, Light Reading

(28)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 3   >   >>
reoptic
50%
50%
reoptic,
User Rank: Light Beer
12/5/2012 | 3:15:01 AM
re: ECI to Buy Laurel for $88M
This is a good move for both companies. ECI picks up one of two available edge router/BRAS players for price much cheaper than Redback alternative. Laurel gets a channel it badly needs and a fair post bubble price. VCs don't get good returns on this one but they don't get a hole in the ground either which would be much worse. Just shows you that building a systems company is a high risk/low reward endeavor nowadays.
fiber_r_us
50%
50%
fiber_r_us,
User Rank: Light Beer
12/5/2012 | 3:14:58 AM
re: ECI to Buy Laurel for $88M
If the employees leave, why would the purchase be a good thing for ECI... They would be left with an unsupportable product.
fiber_r_us
50%
50%
fiber_r_us,
User Rank: Light Beer
12/5/2012 | 3:14:58 AM
re: ECI to Buy Laurel for $88M
I would think the employees basically got screwed here... Their options wouldn't be worth anything. So, all they can say is "I still have a job"! Look for resumes to hit the streets.
geof hollingsworth
50%
50%
geof hollingsworth,
User Rank: Light Beer
12/5/2012 | 3:14:58 AM
re: ECI to Buy Laurel for $88M
Given that the sale price is less than the money invested in Laurel, and management will certainly be getting part of the proceeds, wouldn't it be more like a "high risk, NO return" business?
5urf5hop
50%
50%
5urf5hop,
User Rank: Light Beer
12/5/2012 | 3:14:57 AM
re: ECI to Buy Laurel for $88M
>I doubt ECI was so stupid to screw the common >shares, because $88M would have been more than >enough to start an inhouse effort from scratch.

Really?

Just ask the ex-Procket folks. Both common and preferred got screwed. And yes, many are walking ...
Stevery
50%
50%
Stevery,
User Rank: Light Beer
12/5/2012 | 3:14:57 AM
re: ECI to Buy Laurel for $88M
Just ask the ex-Procket folks. Both common and preferred got screwed. And yes, many are walking ...

Dismembering Procket was a great move by Cisco. They bought only the software portion (which was a lower price than the hardware side or the combined entity) and they took a bunch of talented software guys off the competitive market for a while.

I really doubt csco wanted to make Procket work, since the purchase occured during the same month as the CRS announcement.

And yes, screwing the common there was exactly what was required for complete dismemberment.
Stevery
50%
50%
Stevery,
User Rank: Light Beer
12/5/2012 | 3:14:57 AM
re: ECI to Buy Laurel for $88M

I would think the employees basically got screwed here... Their options wouldn't be worth anything.

You're right, they'd just walk, or get lazy.

I have NEVER seen a deal that screwed the common EVER pay off for the aquirer. Not one. Even dumping the managers and handing out incentives rarely works, because you are left with the hallow shell of what used to be a team.

I doubt ECI was so stupid to screw the common shares, because $88M would have been more than enough to start an inhouse effort from scratch.

lightreceding
50%
50%
lightreceding,
User Rank: Light Beer
12/5/2012 | 3:14:40 AM
re: ECI to Buy Laurel for $88M
putting the resume out there and getting another job is not so easy. The street is flooded with resumes. If it was easy to move on Redback would be vacant, as they all got screwed during the refinancing. The employees are still there just for the job. In any case this seems to be a good move for ECI. They get Laurel cheap and add to their portfolio. They do need to focus on keeping people movtivated at Laurel. But that is obvious.
DPD
50%
50%
DPD,
User Rank: Light Beer
12/5/2012 | 3:14:36 AM
re: ECI to Buy Laurel for $88M
If it was easy to move on Redback would be vacant, as they all got screwed during the refinancing. The employees are still there just for the job.

What makes you an expert on the majority of employees at Redback? How do you what they do and don't want? Maybe they like it there. Maybe the company repriced their options. You shouldn't make blanket statements like that without data.
lightreceding
50%
50%
lightreceding,
User Rank: Light Beer
12/5/2012 | 3:14:36 AM
re: ECI to Buy Laurel for $88M
How do you know that I don't have data?
Page 1 / 3   >   >>
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
4.5G Evolution: Peter Zhou on Advanced MIMO Technologies & 5G Business Prep

2|25|17   |     |   (0) comments


In the process of service transformation, operators need to catch three major opportunities and start deploying in 4.5G networks, such as video, household broadband access and digital transformation of vertical industries. 5G is coming. Operators don't need to wait for it to happen but should progressively deploy 4.5G networks by introducing 5G-oriented ...
LRTV Custom TV
What WTTX Can Deliver

2|23|17   |     |   (0) comments


Mohamed Madkour explains the benefits of WTTX while Dimitris Mavrakis discusses the challenges of delivering home broadband access.
LRTV Custom TV
Huawei on Mobile Broadband

2|23|17   |     |   (0) comments


Mohamed Madkour shares his vision on MBB for the next three years.
LRTV Custom TV
Analysys Mason Talks About the Future of Digital Operations

2|23|17   |     |   (0) comments


The future of digital operations has three key aspects: 1. Highly automated operations for both service and network; 2. Highly converged BSS/OSS for business and resources; 3. Highly merged management and control for real-time cloud native operations.
LRTV Interviews
Software Trends in the Telecom Sector

2|23|17   |   03:40   |   (0) comments


Heavy Reading senior analyst James Crawshaw talks with Telecoms.com Editorial Director Scott Bicheno about trends and developments in the telecoms software sector and what to expect at MWC 2017.
LRTV Custom TV
Huawei's Pre-MWC Analyst Briefing 2017 Highlights

2|22|17   |     |   (0) comments


Huawei shares its vision for this year's MWC.
LRTV Interviews
MWC17: 5G, Cloud RAN & More

2|21|17   |   04:35   |   (0) comments


Ovum Senior Analyst Julian Bright talks to Scott Bicheno from Telecoms.com about all things MWC, including Cloud RAN, Huawei's pitch to the industry and the road to 5G.
LRTV Interviews
MWC 2017's Key 2-Letter Terms

2|20|17   |   08:29   |   (1) comment


5G, AI, VR... these are just some of the two-letter terms that will dominate show-floor chat at MWC 2017 in Barcelona, according to these two blow-hards (a.k.a. Scott Bicheno of Telecoms.com and Light Reading's Ray Le Maistre). And then there's PB...
LRTV Interviews
Key Trends for Mobile Operators in Developing Markets

2|20|17   |   06:37   |   (0) comments


Ovum's Matthew Reed talks to Scott Bicheno from Telecoms.com about the challenges and opportunities facing mobile operators in the developing markets of Africa and the Middle East.
LRTV Documentaries
YouTube Takes on Facebook Live-Streaming

2|17|17   |     |   (0) comments


Popular 'YouTubers' will be the first to get the new service on their smartphones. You have been warned.
LRTV Custom TV
Open Source NFV/SDN Automation

2|17|17   |   05:54   |   (0) comments


AT&T ECOMP (Enhanced Control, Orchestration, Management and Policy) code is transitioning into the Linux Foundation for placement into open source. In this video, Carol Wilson provides an update on the maturation of open source ECOMP and meets with industry leaders from AT&T, Bell Canada, Orange, Linux Foundation and Amdocs to discuss what this means for the ...
LRTV Documentaries
Uber & NASA Collaborate on Flying Car Project

2|16|17   |     |   (0) comments


Is Uber for real? Well, it's hired NASA engineer Mark Moore to lead the project, and he wouldn't come cheap.
Upcoming Live Events
March 21-22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Uber's HR Nightmare: Company Investigates Sexual Harassment Claims
Sarah Thomas, Director, Women in Comms, 2/21/2017
Broadband Has a Problem on the Pole
Mari Silbey, Senior Editor, Cable/Video, 2/21/2017
Verizon to Start Fixed 5G Customer Trials in April
Dan Jones, Mobile Editor, 2/22/2017
Cloud Rains on HPE Earnings
Mitch Wagner, Editor, Enterprise Cloud, 2/24/2017
Verizon Fixed 5G Tests to Top 3Gbit/s?
Dan Jones, Mobile Editor, 2/23/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Animals with Phones
No One Likes This Click Here
Take a hint!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.