Creating a formidable competitor in the emerging market for "unified communications," VOIP system provider Polycom Inc. (Nasdaq: PLCM) said today it is acquiring SpectraLink Corp. , the Boulder, Colo.-based manufacturer of wireless handsets for vertical markets, for $220 million. The $11.75-per-share price represents a 33 percent premium on SpectraLink's stock.

Scheduled to close in the second quarter of this year, the purchase will combine Polycom's rapidly growing desktop VOIP business, and its global sales channels and partnerships, with SpectraLink's strong position in selling specialized WiFi handsets to vertical markets such as healthcare and retail.

The acquisition comes on the same day that SpectraLink reported slightly disappointing results for the fourth quarter of 2006. Revenues, margins, and earnings all declined, with the company making $573,000 on revenues of $37.5 million, down 7 percent from the fourth quarter of 2006. The company attributed the decline to a slow quarter for OEM sales, where it has relationships with large vendors including Nortel Networks Ltd. and Avaya Inc. .

Those results don't deter Polycom CEO Robert Hagerty, who foresees powerful results from combining the two companies' portfolios.

"We're in a unique position," Hagerty said in a conference call announcing the acquisition. "Polycom is the only independent provider of fixed and mobile solutions for voice, video, and Web collaboration, whether to the desktop, to a meeting room, or to a mobile individual.

"The strategic and operational synergies of this combination will enable Polycom to capture the full strength of the mobility opportunities of this market."

Those synergies will also put Polycom into more direct competition with Cisco Systems Inc. (Nasdaq: CSCO), which has devoted plenty of resources, and marketing efforts, to developing its own line of unified VOIP handsets and solutions. With the overall enterprise WiFi market growing by 19 percent in the third quarter of 2006 alone, according to Synergy Research Group Inc. , mobile VOIP and voice over wireless LAN are expected to be among the hottest telephony markets in the coming year. Cisco dominates the enterprise WiFi market with a 61 percent share.

In reporting his company's second-quarter results yesterday, Cisco chairman and CEO John Chambers said, "As the network becomes the platform, we are seeing more and more signs that all forms of IT and communication are moving into the network and increasing the total available market to Cisco."

"In the last couple of years we've been very pleased with our rapid growth in the VOIP space," counters Sunil Bhalla, general manager of Polycom's voice division. "As our presence with our customers increases, more and more of them are requesting that Polycom provide a full suite of mobility solutions as well."

— Richard Martin, Senior Editor, Unstrung