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NetHawk Plucks VOIP Tester

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News Analysis
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Finnish test vendor NetHawk Oyj is set to buy Richardson, Texas-based ipNetFusion in a bid to boost its VOIP testing capabilities (see Test Firms Plan Merger).

Although the current agreement is non-binding, NetHawk CEO Hannu Huttunen expects to close a stock-and-cash deal by the end of April. He values ipNetFusion, which recorded 2004 revenues of around $10 million, at about $26 million.

The deal adds fuel to the already hot VOIP testing market, which has seen its share of growth and deals over the last 18 months (see Report Touts VOIP Test Market , Tektronix Acquires Inet for $325M, Spirent Ups VOIP Test Ante, Empirix Has Growth Spurt, Testing Minnow Crosses Atlantic, and Test Vendors Target VOIP, IPV6). the wide deployment of VOIP services is fueling the demand for new test gear.

NetHawk is a growing provider of test equipment to mobile network equipment vendors and service providers. With the acquisition, it adds depth to its mobile technology test portfolio, where ipNetFusion has developed test tools for push-to-talk and HSDPA (High-Speed Downlink Packet Access), an emerging high-speed data technology for mobile networks.

"We haven't been doing too many VOIP products and solutions, and that's where ipNetFusion is strongest," says Huttunen.

A quick entry into the increasingly hot VOIP test sector via an acquisition makes sense, as developing products from scratch would leave NetHawk trailing its competitors.

That growth will be spurred by the ongoing deployment of VOIP by both fixed and mobile operators, and boosted further by the emergence of new SIP-capable technologies developed for future, converged networks –- a key topic at this week's 3GSM World Congress in Cannes, France (see IMS Tops 3GSM Agenda).

Huttunen says the company will remain focused on the mobile market, where NetHawk has been launching new test products and services regularly during the past year, though he adds, "ipNetFusion's VOIP test capabilities will provide us some opportunities on the fixed-IP network side too," (see NetHawk Intros Multi-Analyser, NetHawk Probes 3G, NetHawk Analyses Networks, and NetHawk Troubleshoots 3G).

There is little geographic overlap in the deal. NetHawk says it has a customer base of 100 mobile operators and "all the major GSM equipment providers" in Europe and Asia, while ipNetFusion's sales come almost exclusively from North America, though it does boast Austrian access equipment vendor Keymile AG as a customer.

Other companies making moves in the VOIP testing market include Tektronix Inc. (NYSE: TEK), one of NetHawk's main competitors, which paid $325 million for Inet (see Tektronix Acquires Inet for $325M).

Other than Tektronix, Huttunen says his firm's other main competitor is industry giant Agilent Technologies Inc. (NYSE: A), which has a broad range of hardware and software-based test and monitoring platforms (see Agilent Offers MultiUser 3G, Agilent Offers OSS for UMTS, Agilent Launches VOIP QOS Tool, and Agilent Watches VOIP). Catapult Communications Corp. (Nasdaq: CATT) provides the most direct competition for ipNetFusion, he adds (see Catapult Tests 3G).

News of the impending acquisition comes as NetHawk unveils an improved financial performance in 2004. It posted a €3.3 million ($4.3 million) profit from sales of €22.6 million ($29.4 million), compared with net income of €0.9 million ($1.2 million) from revenues of €19.3 million ($25.1 million) in 2003.

— Ray Le Maistre, International News Editor, Light Reading

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