NDS Extends to Gateway With Jungo Buy

UK-based IPTV middleware player NDS takes out home gateway software startup Jungo for $90.5 million

December 5, 2006

3 Min Read
NDS Extends to Gateway With Jungo Buy

IPTV middleware company NDS Ltd. announced its acquisition of the Israeli residential gateway software company Jungo Ltd. Monday for $90.5 million in cash. (See NDS Acquires Jungo .)

That price could go up to $107.5 million if Jungo earns an extra $17 million by hitting certain financial goals in the next year. NDS would not detail the exact terms of the payout. The deal is expected to close in the first quarter of 2007. (See NDS Announces Fiscal Q1.)

U.K.-based NDS, which is majority owned by Rupert Murdoch's News Corporation, sells the IPTV middleware that powers set-top boxes in the home. The company hopes to integrate Jungo's home gateway software tightly with that middleware. It believes this will allow video to be delivered more smoothly, and allow bandwidth to be parceled out more prudently to other services running over the home network. (See Jungo Completes TR-069.)

"The complementary nature of broadcast and broadband is going to be critical," said NDS CEO Dr. Abe Peled during a conference call Monday afternoon. "I think when we add [Jungo] to some of our expertise in IP, it can provide Jungo both a differentiation in the marketplace in which they already operate, and will provide NDS a better product on our side for both standalone and hybrid IPTV services."

The companies say integration with the Jungo software will also allow set-top boxes to do some cool new tricks. These might include such things as accessing music, video, and pictures stored on PCs in the home; archiving digital content stored on the DVR; and setting up video conferencing sessions with VOIP. (See NDS Migrates IPTV.)

Peled told analysts that Jungo had revenues of $11.4 million during the first nine months of 2006. For now, Jungo will continue to operate as a separate unit within NDS under the current management team. "We expect Jungo to continue to gather momentum," Peled said.

So far Jungo has used a two-pronged approach to selling its software into carrier networks. "We typically have established relationships with OEMs that are going to the operators, but more and more we are establishing relationships directly with the operators themselves, which we've done over the past year and a half," Jungo CEO Ofer Vilenski told analysts Monday.

"The major accounts that we have are with an OEM in the U.S. that is supplying all the home gateways for Verizon," Vilenski says. "So the Verizon gateways are using our OpenRG software." Here he refers to his company's huge win earlier this year supplying software for the Actiontec Electronics Inc. residential gateways used in the homes of Verizon Communications Inc. (NYSE: VZ) FiOS customers. (See Home Networking Drives Jungo Win and Verizon: Lights, Camera, Actiontec!)

Jungo has also sold its software through OEM partnerships with Cisco Systems Inc. (Nasdaq: CSCO), Siemens AG (NYSE: SI; Frankfurt: SIE), Westell Technologies Inc. (Nasdaq: WSTL), and others. Other carriers now using Jungo software include Orange (NYSE: FTE), NTT Group (NYSE: NTT), Telecom Italia (TIM) , and Qwest Communications International Inc. (NYSE: Q).

Prior to the acquisition, Jungo had raised $13.5 million in venture capital funding.

NDS itself reported operating income of $45 million during its fiscal first quarter on revenues of $164 million. The company says 44 million set-top boxes around the world have NDS middleware running inside.

Other than client-side middleware, NDS sells conditional access (CA), digital rights management (DRM), and digital video recorder (DVR) software modules to the cable, satellite, and xDSL markets. (See IPTV Metro Multicasting.)

— Mark Sullivan, Reporter, Light Reading

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