Light Reading

Tdsoft Saves VocalTec

Ray Le Maistre
10/28/2005
50%
50%

Israeli VOIP pioneer VocalTec Communications Ltd. (Nasdaq: VOCL) has been saved from the telecom scrapheap by its nextdoor neighbor, media gateway vendor Tdsoft Ltd. (See Tdsoft, VocalTec Merge.)

Talk of Tdsoft emerging as a white knight emerged last month after softswitch vendor VocalTec, which has been on the ropes for more than a year as its business fell away, received a delisting warning from Nasdaq. (See Late Reprieve for VocalTec?, VocalTec Receives Nasdaq Warning, VocalTec in End Game, and VOIP Pioneer Faces Meltdown .)

While Tdsoft is, in effect, taking over VocalTec, the deal involves Tdsoft becoming a fully owned subsidiary of the listed company. VocalTec is issuing new stock that it will exchange for all of Tdsoft's share capital, after which, Tdsoft's shareholders will own 75 percent of the new, combined company, and VocalTec's current shareholders 25 percent. In effect, that makes Tdsoft worth three times VocalTec's valuation.

The news sent VocalTec's share price soaring. Having closed Thursday at $0.41, which gave VocalTec a market capitalization of $5 million, it shot up this morning by 19 cents, more than 46 percent, to $0.60, giving the softswitch firm a valuation of $7.3 million.

That makes Tdsoft worth nearly $22 million, though the media gateway firm's VP of marketing and sales, Dan Ostroff, says VocalTec was worth more when the term sheet was signed in August. VocalTec's share price peaked at $0.68.

Once the merger is complete, which should happen early December, major Tdsoft stakeholders, (Nasdaq: CSCO) and Harbour Vest Partners LLC, will own about 36 percent and 20 percent, respectively, of the new company, while current VocalTec shareholder Deutsche Telekom AG (NYSE: DT) will own 3.8 percent.

Ostroff says the majority of VocalTec's staff, about 30 people, will be retained, "apart from a few in finance and administration." VocalTec's CEO Elon Ganor will "remain as a board director, but won't have an active role as an employee," while Joseph (Yosi) Albagli, Tdsoft's current CEO and president, will lead the new firm, which will have about 100 staff.

Tdsoft is believed to have annual revenues of about $20 million, while VocalTec is generating little more than $1 million in revenues per quarter at present. The VOIP equipment market is currently worth more than $600 million per quarter. (See VocalTec Reports Q2, Cuts Back and VOIP Equipment Revenue Up 18%.)

Ostroff reckons the merger will be relatively easy, as the two companies, which are based just 100 meters from each other, have similar corporate cultures and can benefit from a lot of technical synergies.

He also believes the combination of his company's media gateways with VocalTec's softswitch technology will lead to additional sales opportunities to VocalTec's carrier customers, including Deutsche Telekom and Romtelecom S.A., and a subsidiary of Telecom Italia SpA (NYSE: TI), among others. (See Spain's Nova Deploys VocalTec VOIP, TI Subsidiary Picks VocalTec VOIP, T-Systems Helps Hanoi With VOIP, and VocalTec Expands DT Deal.)

Then there are Tdsoft's channel partners, such as Lucent Technologies Inc. (NYSE: LU), Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), NetCentrex SA, Siemens Communications Group, and Sonus Networks Inc. (Nasdaq: SONS), to pump. (See Tdsoft Joins Sonus Alliance and NetCentrex, TdSoft Team Up.)

But don't such partners have their own products that would compete with VocalTec's softswitch technology? Ostroff says not all of Tdsoft's partners have their own feature set technologies, adding that VocalTec has developed some nifty technology recently that is able to connect H.323 and SIP networks and then act as a SIP router.

"This is a unique opportunity for Tdsoft. We can benefit from VocalTec's carrier customer base and technology patents," says Ostroff.

VOIP sector analyst Jon Arnold, of J. Arnold and Associates, says that as both parties are small companies, "this is not going to change the market." He notes, though, that VocalTec has a good technical pedigree, a known brand, and carrier relationships, especially with Deutsche Telekom, that the Tdsoft team can exploit.

"It's possible that Tdsoft could use VocalTec's technology and expertise to develop its own gateway products into a much more intelligent edge device, and make it a much more powerful product," says Arnold. (See Tdsoft Launches VOIP Gateway.)

— Ray Le Maistre, International News Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
LightWarrior
50%
50%
LightWarrior,
User Rank: Light Beer
12/5/2012 | 2:55:39 AM
re: Tdsoft Saves VocalTec
Sometimes you need to let sleeping dogs lie, or in the case of VocalTec, dead dogs die. TDsoft will find the software business a strategic landmine. It will alienate most of its current channel partners with their own softswitches and VoIP application servers. It will also force it into the HW/SW dual personality that only a much larger company like Siemens or Nortel can afford to converge. Also, H.323 to SIP is not that big a deal, and other companies like NetCentrex have excelled at doing this for 5 years. As they taught me in M&A 101 in business school "a rock tied to a feather will still sink."

Sad to see TDsoft making this big a mistake being that it is a well-run company with good people. But everyone can get eyes that are too big for their stomachs. The loss of the Israeli technology icon VocalTec must have been too much to bear. How else do you explain this deal?
From The Founder
Light Reading sits down at CES with the head of Cisco's service provider video business, Conrad Clemson, to discuss how NFV and cloud security relate to video, the challenge of managing 4K/8K traffic, the global expansion of Netflix and virtual reality.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Custom TV
Join Us at the Digital Operations Transformation Summit

2|4|16   |   03:52   |   (0) comments


The Digital Operations Transformation Summit on February 21, 2016 at the Crowne Plaza Barcelona Fira Centre will bring together 50 senior executives to engage in a unique debate on the opportunities and challenges presented by the transformative evolving digital landscape. RSVP now at events@lightreading.com.
LRTV Custom TV
Making the Test: ADVA Ensemble Connector vs. Open vSwitch

2|4|16   |   01:28   |   (0) comments


Light Reading, in partnership with EANTC, recently tested ADVA's Ensemble Connector, which replaces open vSwitch and offers carrier-grade capability and interoperability. The test results strengthen ADVA's credibility as a provider in the virtualization space.
LRTV Custom TV
Bridging the Gap Between PoCs & Deployment in NFV

2|4|16   |   31:50   |   (0) comments


Charlie Ashton of Wind River presents the keynote at Light Reading's 2020 Vision executive summit in Dublin.
Between the CEOs
CEO Chat With Mike Aquino

2|3|16   |   17:34   |   (0) comments


The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Shades of Ray
MWC: Buckle Up for 5G & the IIoT

2|2|16   |   02:28   |   (0) comments


This year's Mobile World Congress looks set to be a 5G land grab and a chance to get down and dirty with the Industrial Internet of Things (IIoT) – but what will the 5G discussions actually be about?
LRTV Custom TV
Case Study: Building China's Next-Gen TV Networks

2|2|16   |   5:01   |   (0) comments


With over 2 billion viewers worldwide, Shenzhen Media Group is one of China's largest content producers. By partnering with Huawei and Sobey, SZMG was able to modernize media operations with the Converged News Center, a production studio that is a model for next-generation workflows.
LRTV Custom TV
Quad Channel Modulator Driver with 46 Gbaud Capability from MACOM

1|28|16   |     |   (0) comments


MACOM's MAOM-003427 is the industry's first surface-mount modulator driver with 46 Gbaud capability to support next generation 200G and 400G applications.
LRTV Custom TV
Video Infographic: Validating Cisco's NFV Infrastructure

1|26|16   |   02:24   |   (1) comment


We all know that the network of the future will be virtual, but when will virtual become a reality? This video infographic covers the four key areas in which Light Reading, in partnership with EANTC, tested Cisco's NFV infrastructure: performance, reliability, multi-service capabilities and single pane of glass management.

For the full report, see

Between the CEOs
CEO Chat With Phil McKinney, CableLabs

1|22|16   |   13:36   |   (1) comment


At CES in Las Vegas, we met with Phil McKinney, CEO of CableLabs. Phil provides an update on the rollout of DOCSIS 3.1, his views on the future of open source and how consumer interest in virtual reality could affect network traffic.
Between the CEOs
Ericsson CTO on the Changing Telecom Market

1|21|16   |   10:26   |   (0) comments


At CES 2015, CTO of Ericsson, Ulf Ewaldsson, sits down with CEO of Light Reading, Steve Saunders, to discuss the changing telecom market, the new partnership with Cisco and the future of the telecom industry.
LRTV Interviews
Ireland's Data Dream

1|21|16   |   14:31   |   (0) comments


Host In Ireland president Gary Connolly tells Light Reading's Steve Saunders about the role Ireland is playing in hosting data for the world's largest organizations.
LRTV Custom TV
Brocade Keynote: Transitioning to the New IP

1|20|16   |   27:23   |   (0) comments


At 2020 Vision in Dublin, Andrew Coward, VP of Service Provider Strategy at Brocade, presents the transition to the New IP.
Upcoming Live Events
March 10, 2016, The Cable Center, Denver, CO
April 5, 2016, The Ritz Carlton, Charlotte, NC
May 23, 2016, Austin, TX
May 24-25, 2016, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Cisco's latest VNI numbers suggest the world will be using 366.8 exabytes of data on smartphones and Internet of Things devices, up from 44.2 exabytes, in 2015.
Hot Topics
Alphabet Is Serious About Google Fiber
Mari Silbey, Senior Editor, Cable/Video, 2/1/2016
Did Juniper Pay 'Peanuts' for BTI?
Mitch Wagner, West Coast Bureau Chief, Light Reading, 2/2/2016
Google's 5G Radio Ambitions Are Expanding
Dan Jones, Mobile Editor, 2/5/2016
How Data Center Outsourcing Fuels AT&T NetBond Growth
Carol Wilson, Editor-at-large, 2/3/2016
3.5GHz Startup Gets $22M for Small Cells
Dan Jones, Mobile Editor, 2/2/2016
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
As anyone who knows me will tell you, I like to think I know a fair bit about this next-gen-comms malarkey, but there's nothing like an interview with one of the ...
Animals with Phones
Happy Groundhogs for Technology Day! Click Here
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and G.fast for copper plant evolution and the various deployment possibilities for FTTH/B.