Light Reading
NetCracker may choke on Convergys SPIT assets, reckons one analyst, while another sees AlcaLu and integrators as the potential casualties

Analysts Mull NetCracker's New Buy

Ray Le Maistre
3/29/2012
50%
50%

The news that NEC Corp. (Tokyo: 6701)'s Service Provider Information Technology (SPIT) subsidiary NetCracker Technology Corp. will acquire Convergys Corp. (NYSE: CVG)'s Information Management telecom software business unit for $449 million has generated varied responses from the analysts who follow the telecom software sector. (See NEC to Buy Convergys Unit for $449M.)

Heavy Reading Senior Analyst Ari Banerjee has already stated that he believes Convergys IM is a good fit for NetCracker. (See NetCracker Plays End-to-End Game.)

Infonetics Research Inc. Directing Analyst Shira Levine is also positive. "I understand the rationale behind the acquisition," she notes in an emailed response to questions. "In many ways, NEC is following the lead of Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. , etc. in beefing up its software business as equipment becomes commoditized and margins continue to decline for that business."

And she believes NEC is getting a good deal, "given the significant investment that Convergys has made in the IM business over the years."

Levine does have concerns over NetCracker's post-acquisition challenges. The Convergys unit will be a "pretty big mouthful for NEC/NetCracker to swallow. ... Convergys will be integrated into the NetCracker portfolio, and I think that will be a difficult endeavor."

However, Analysys Mason partner and head of Telecoms Software Research Larry Goldman believes NEC/NetCracker stands to make a good job of assimilating Convergys IM.

"We expect that Convergys IM will remain a strong or slightly stronger competitor as a result of this acquisition," states Goldman in a research note shared with Light Reading. "Previous acquisitions of software suppliers by network equipment suppliers have notoriously destroyed valuable businesses, but NEC showed with its acquisition of NetCracker in 2008 that it was able to preserve the independent value of an established software business. By organizing Convergys IM in the NetCracker unit, NEC is signaling its intent to preserve that same independence."

He does agree with Levine on the main reason behind NEC's decision to acquire the Convergys unit, as he sees the move as a way for NEC to lessen its dependence on equipment sales, especially in Japan.

"The most fundamental motivation for NEC in this acquisition is to strengthen its software and services offers. ... IT services is already a bigger business within NEC than selling carrier equipment. This acquisition strengthens its position outside of Japan and complements its existing NetCracker OSS products. The billing area is not a fast-growing segment, but NEC can reasonably hope for increased services business that accompanies all billing and customer care implementations."

And like Heavy Reading's Banerjee, Goldman expects NEC to invest in its new assets once the deal closes. "We think it is likely that NEC will invest in strengthening some aspects of the IM products, particularly in real-time rating and charging. We also expect NEC to apply its strengths in implementation services to the Convergys products business, making NEC overall a more complete supplier, and reducing Convergys IM's dependence on third-party integrators."

And it's not just integrators that stand to lose out. Goldman notes that "Convergys is Alcatel-Lucent (NYSE: ALU)'s preferred billing systems supplier for deals where Alcatel-Lucent is the prime integrator in network operator solutions." (See Major Vendors Kiss OSS and AlcaLu, Convergys Team Up.)

Now it's likely AlcaLu will need to find another independent billing systems vendor with which to team up, just like it had to after Ericsson acquired its previous billing partner LHS in 2007. (See Ericsson Buys Billing Vendor LHS and LHS, AlcaLu Team Up.)

— Ray Le Maistre, International Managing Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
LRTV Custom TV
Exploring the Future of Cable Access

10|15|14   |   6:23   |   (0) comments


Cisco's Brett Wingo looks at where cable access architectures are heading, discussing the impact of DOCSIS 3.1, CCAP, Remote PHY, SDN, virtualization of cable networks and related technologies.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Forget the Internet, Brace for Skynet
Stephen Saunders, 10/15/2014
HBO Will Go OTT in 2015
Mari Silbey, Independent Technology Editor, 10/15/2014
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
Could Data Be the New 'Currency'?
Ray Le Maistre, Editor-in-chief, 10/16/2014
iPad Air 2 Lets Users Switch Carriers Any Time
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/17/2014
Like Us on Facebook
Twitter Feed