Pulling the Strings At Genband
Genband's CEO David Walsh may have only been in the hot seat for two months, but he wants to make it clear he's been pulling the strings at the networking company for more than a decade.
In June, former CEO Charlie Vogt, known for his work transforming Genband Inc. from a box maker into a software company, and for closing six acquisitions in nine years, left to take on the Chief Executive position at Harris Broadcast. Walsh, Genband's chairman, took over Genband's CEO slot at that time, leaving many to question what comes next for the company, strapped with its legacy equipment businesses but looking to dominate the evolving IP market. (See: Genband CEO Quits, Joins Harris Broadcast and What's Next for Genband?)
"I wouldn't characterize this as 'Walsh arrived on the scene to replace Charlie Vogt,'" Walsh explains. "I've been driving this since 2005. I've been involved in every decision, and teed up every strategy."
As a result, Walsh has a lot of definitive answers to questions about Genband's future under his leadership, and he's determined to convince communication service providers (CSPs) that Genband can be everything they need and more.
He admits that moving from legacy to next-gen products and to IP, as well as ingesting multiple acquisitions in an uncertain economy, has been trying on the company, but says it has now plugged the "deficiencies" in its business to create a full IMS and multimedia platform for its operator customers.
Now, he claims, Genband is bigger, more profitable, more comprehensive, and more future proof than any of its competitors, including Sonus Networks Inc. (Nasdaq: SONS), Acme Packet Inc. (Nasdaq: APKT), BroadSoft Inc. , and Metaswitch Networks .
"We have zero debt; one share holder," Walsh says, referring to OEP, where he used to be managing director and which owns more than 90 percent of Genband. "We can be focused and nimble. We have global field service and technical capabilities and a global sales organization, and no one [else] can offer the apps, session border capability, media gateway, softswitch -- no one has that product depth we have."
Genband's mobile story
One thing Genband hasn't had is a strong mobile story. While well established in the fixed space, the CSP world is largely going mobile, and Genband has to convince its customers it will keep up. Walsh says the company doesn't segment its business between fixed and mobile, instead focusing on building a unified experience perspective from where it sits at the session and app layers of the network. There, the needs of fixed and mobile operators look the same, he says.
Even so, Heavy Reading analyst Jim Hodges believes Genband will need to emphasize its play in the mobile space, even though it's hyper competitive. The strategy of focusing on end-to-end multimedia services is the correct approach, but especially in mobile, if Genband wants to grow revenue significantly, he says.
"Adopting an aggressive virtualization approach in the core could also be of assistance if it's tied to the ability to support personalized and policy-based services, but Genband will have to move quickly," Hodges adds.
Relative to the big opportunities out there, Ryan Koontz, managing director at Woodside Capital Partners, believes that IMS is still a very promising area, but his concern for Genband is the breadth of its portfolio. "Most competitors are outsourcing more and more of network design and not buying best of breed," he says. "They are looking to turnkey vendors to do it."
So, can Genband be all things to everybody? Koontz questions whether it can move away from its legacy business to do so and whether its private equity owner, OEP, will give it the flexibility to grow organically. "Down the road, it's a lot of investment," he says, though he notes that Genband's relationship with its big installed base will help.
End of the road to IPO
One area where Genband won't be moving quickly is down the path to an IPO. Under Vogt's tenure, an IPO was always the stated goal, but Walsh says that given the dynamics -- Genband's multiple acquisitions and its transition away from its legacy businesses to IP -- he doesn't think it's the right time to go public. "It's a massive distraction," and Genband doesn't need the money, he says, before quickly adding that nothing is totally off the table.
He also says that, despite rumors, Genband is not considering divesting any of its businesses, and nor is he looking to shake up the company's management team, which has been in place since 2005.
Rather, the company is looking for more M&A opportunities -- in fact, Genband just announced the acquisition over-the-top (OTT) app specialist fring. (See: Genband Acquires fring to Help CSPs Go OTT.)
But Walsh is more interested in acquiring Genband's competitors than buying his way into new lines of business, though he did cite deep packet inspection (DPI) as another new area of potential M&A interest.
Walsh says Genband's transformation into a software company is complete, and the hardware part of its business is "really in the rearview mirror." He's not going to slice and dice the company, as many feared. Rather, he wants to evolve it for whatever communications trend takes hold next.
Genband can be everything to everybody, he believes: The major outstanding question, though, and the one that really matters, is whether the operators will believe it, too.
— Sarah Reedy, Senior Editor, Light Reading