Procera Picks New Path

Hardware vendor looking for leg up in hardware space. M&A or strategic investment welcome

July 12, 2005

3 Min Read
Procera Picks New Path

Publicly traded hardware vendor Procera Networks Inc. (OTC: PRNW) is exploring “strategic alternatives” in an attempt to raise its profile within the networking space, the company announced today (see Procera Explores Strategic Alternatives).

The Campbell, Calif.-based vendor has been selling its OptimIP devices for less than a year, but is now looking for a leg up in a market dominated by the likes of Cisco Systems Inc. (Nasdaq: CSCO), Foundry Networks Inc. (Nasdaq: FDRY), Extreme Networks Inc. (Nasdaq: EXTR), and Juniper Networks Inc. (Nasdaq: JNPR).

Gary Johnson, Procera’s senior vice president of sales and marketing, told NDCF that the company is considering a wide variety of options. “We’re looking at all strategic alternatives,” he says. “We’re looking at merger, acquisition, and strategic investment.”

The fact that Procera has turned to investment bank Houlihan, Lokey, Howard & Zukin Inc. as its advisor underlines the vendor’s desire to woo potential partners. The bank is regarded as one of the leading M&A advisors in the U.S. and has recently worked on deals involving L’Oreal and Scottish Power.

Although he would not say whether Procera has had any offers, Johnson confirmed that the firm is looking for a partner with existing sales channels and customer credibility. “This will enhance our whole sales motion and add to our penetration significantly,” he says.

Procera’s OptimIP devices combine security and application performance control and can be deployed either at the core or the edge of a network. The gear has the ability to prioritize traffic as it flows across the network, determining, for instance, which employees can access specific data or applications (see Procera Launches OptimIP 12012).

Did the recent launch of Cisco’s Application Oriented Networking (AON) technology prompt Procera’s decision? (See Cisco Gets Application-Oriented.) “No,” says Johnson. “We have been delivering AON-like functionality since we introduced our products early this year.”

Whereas, at the moment, Cisco's AON strategy depends on specific blades built into its own switch technology, Procera says it already offers a similar functionality within its standalone devices.

With Cisco planning to launch its own standalone AON device later this year, it will be interesting to see whether Cisco or any of its rivals turns to Procera. A recent Light Reading poll suggested that Cisco’s next acquisition is likely to be in the security space (see Poll: Cisco's Next Move?).

It is unclear what the extent of Procera’s existing client base is. Johnson was unwilling to confirm exactly how many customers Procera has. “We’re making some significant traction by focusing on some key verticals,” he adds. This includes areas such as banking, education, managed services, and federal government.

Johnson was much more forthright when asked whether any layoffs are planned for Procera’s workforce of around 40 people. “Absolutely not!” he says. “We’re actually in growth mode.”

Procera, which was set up in 2001, is a spinoff from networking specialist Digi International. The firm was founded by Doug Glader, the former COO of Digi International and co-founder of Greyhawk Systems, a manufacturer of electronic imaging hardware and software. Glader now serves as Procera’s CEO.

The firm’s CTO is Anil Sahai, the former CEO and founder of systems performance management firm Ezyte. Procera acquired Ezyte’s intellectual property last year.

Earlier this year the company bagged $4.6 million in financing to support the development of its OptimIP devices, bringing its strategic funding to around $10 million (see Procera Picks Up $4.6M). Despite the decision to change direction, Johnson insists that Procera, with a market cap of around $30 million, has still got money behind it. ”This does not have to do with running out of money –- it’s about increasing market penetration,” he adds.

— James Rogers, Site Editor, Next-Gen Data Center Forum

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