Andrew Buys Antenna Maker
Andrew, which called off a planned merger with ADC (Nasdaq: ADCT) in August, says that the buyout will "slightly" add to its earnings in fiscal 2007. The Westchester, Ill.-based firm recently reported a quarterly loss of $59.7 million for its fiscal fourth quarter, compared to a profit of $7.5 million the year before.
"EMS Wireless will strengthen our relationships with key customers and extend our leadership position in wireless subsystems," said John DeSana, group president of the antenna and cable products segment for Andrew Corporation, in a statement.
A division of EMS Technologies Inc. (Nasdaq: ELMG), EMS Wireless had revenues of $28.5 million for the first half of 2006. It employs around 200 people in Norcross, GA., and Curitiba, Brazil. The buyout is expected to be completed within 30 to 60 days.
Consolidation has been tearing through the RF subsystems sector over the past few years, with smaller players getting picked up by either Andrew or Powerwave Technologies Inc. (Nasdaq: PWAV). This buyout continues that trend.
It's getting more difficult to be a smaller player in the base station market, notes Unstrung Insider chief analyst, Gabriel Brown: "Overall the outlook for the third-party RF subsystem suppliers is pretty tough. They’ve always had to compete against the in-house teams at the major equipment vendors, and the recent consolidation in that sector is going to have a massive, knock-on impact on the supply chain." (See Vendor M&A Frenzy: What Happens Next and Size Matters in 3G Wireless.)
On the positive side, Brown sees new opportunities for these subsystem or "module" vendors in the cellular equipment market, as internal base-station interfaces become standardized. (See 3G Base Station Design & Wireless Network Economics and Cutting Costs in Wireless Networks.)
Another growth area is in-building coverage systems to support the rollout of 3G services. "We anticipate accelerating demand for fiber-fed distributed antenna systems, as well as RF repeater and picocell products as carriers seek to improve the quality of service they can offer to enterprise customers," Brown adds. (See In-building Cellular: Selling the Great Indoors and From Closed to Open Mobile Networks.)
— Dan Jones, Site Editor, Unstrung