& 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
Light Reading today starts a new voyage as part of a larger Enterprise.
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 Interviews
No Stopping Cable's Ethernet Gains

12|9|16   |     |   (0) comments


Vertical Systems' Erin Dunne explains why US cable operators, which now command a record-high 26% of the Ethernet market, will keep boosting their share.
LRTV Interviews
Fixing IoT Security Is an Ecosystem Challenge

12|9|16   |   05:34   |   (1) comment


Level 3 Communications' Chief Security Officer Dale Drew says service providers, manufacturers and even consumers must combine to halt massive DDoS attacks using IoT devices in botnets. The solution he has in mind includes reputation-based routing by the service provider but also more secure endpoint devices and greater consumer awareness.
LRTV Interviews
Cox Clears $2B in Business Revenue

12|8|16   |     |   (0) comments


Cox's Jeff Breaux discusses how the third-largest US MSO will reach the $2 billion revenue mark this year and plans to hit $3 billion by 2021
LRTV Interviews
Can Cable Climb Upmarket?

12|7|16   |     |   (0) comments


Carol Wilson and Alan Breznick assess cable's prospects for winning more enterprises in a landscape rocked by corporate M&A activity.
Women in Comms Introduction Videos
TalkTalk Exec: Find Your North Star at Work

12|7|16   |   3:38   |   (1) comment


Women need to find their purpose, a professional North Star, and create a personal board for themselves, according to Alex Tempest, director of partners at TalkTalk Business.
LRTV Interviews
Verizon: Beware Unknown Unknowns

12|7|16   |   04:58   |   (0) comments


Chris Novak, director of the Verizon Enterprise Solutions Risk Team, explains that enterprises who don't conduct a thorough audit of their assets often leave some things unprotected because they don't know they exist. Many times these unprotected assets are part of corporate M&A activity but left unshielded they can become a hacker's playground, he tells Light ...
LRTV Interviews
ETSI's CTO Talks NFV, 5G & NGP

12|5|16   |   09:45   |   (0) comments


Adrian Scrase, CTO at standards body ETSI, talks about the various initiatives and specifications developments related to NFV, 5G and NGP (next-generation protocols) that will underpin next-gen networks.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (2) comments


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
Upcoming Live Events
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cable Nodes Becoming a Choke Point
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 12/5/2016
Consolidated Snaps Up Fairpoint for $1.5B
Iain Morris, News Editor, 12/5/2016
Small Arctic ISP Caches Netflix in New Way
Mari Silbey, Senior Editor, Cable/Video, 12/7/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
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.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
A Mobile Safari Click Here
Literally.
Latest Comment
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.