Motorola Snaps Up MPEG-4 Player
Motorola announced today it will pick up Modulus's portfolio of encoding gear that supports the advanced, bandwidth-saving MPEG-4 codec. Financial terms were not disclosed. (See Motorola to Buy Modulus.)
An official for privately held Modulus declined to reveal company revenues but noted that AT&T Inc. (NYSE: T) is one of Modulus's flagship customers. April 2006 was the last time Modulus publicly stated anything revenue-related, announcing it had won IPTV orders exceeding $10 million. The company has raised more than $18.5 million in funding.
Based in Sunnyvale, Calif., Modulus has 57 employees, and most are expected to become part of Motorola's Home and Networks Mobility (formerly Connected Home Solutions) division when the deal closes in the second or third quarter of 2007.
Motorola, which has resold Modulus products since mid-2005, will then look to match up its new acquisition with video-focused technologies and products obtained in other recent acquisitions such as Broadbus Technologies, Kreatel, Tut Systems, and Netopia. (See Motorola Acquires Kreatel, Motorola Scoops Up Broadbus, Motorola to Buy Tut, and Motorola Gobbles Up Netopia.)
"With all things video being front and center, Modulus certainly fits into the [Motorola] portfolio," says Patti Reali, research director for the technology and service provider research unit at Gartner Inc. .
It also positions Motorola as its competitors continue to make plays for smaller firms that make next-gen broadband and video products.
"A lot of [the M&A activity] is about who is going to grab the best assets and keep them out of the others' hands," Reali says.
"Motorola is certainly making some noise," says Oppenheimer & Co. Inc. analyst Alan Bezoza. Although some may argue that Motorola has underinvested in its hybrid fiber/coax (HFC) architecture, the company "wants to be a player in the next-generation video space," he adds.
But the Motorola deal could disrupt relationships Modulus had with other parties, including Scientific Atlanta and Harmonic Inc. (Nasdaq: HLIT), Bezoza says.
It won't be the first time a Motorola acquisition has had that effect, intentionally or otherwise.
For example, Motorola's pending deal for Terayon Communication Systems Inc. could have a significant effect on one of its other resale partners, RGB Networks Inc. Once the Terayon deal is put to bed, Motorola will no longer sell RGB's Broadcast Network Processor (BNP) and Modular Media Converter (MMC), because those products overlap with Terayon's. Motorola will be able to continue reselling RGB's Simulcast Edge Processor (SEP), however. (See Motorola to Buy Terayon for $140M and RGB: Ripe for Aquisition? )
— Jeff Baumgartner, Site Editor, Cable Digital News