Overture Snaps Up Ceterus
Research Triangle Park, N.C.-based Overture says the resulting company will be the market leader in "multiple, high-growth Carrier Ethernet segments" and boast a product portfolio that includes "a complete line of Carrier Ethernet edge and aggregation systems."
The combination certainly creates a leader in the small but growing market for Ethernet-over-TDM access circuit products, a sector in which both companies have been building expertise and customer bases for some years. (See Overture Beefs Up Access, Sweet Music for Overture, Verizon Business Certifies Overture, Ceterus Goes All Optical, A Guide to PBT/PBB-TE, and Alpheus Picks Ceterus.)
Together, the two companies claim to have more than 15,000 units deployed at 180 customers worldwide, including "10 of the top 15 Carrier Ethernet service providers in the United States," according to Overture. The customer list includes Verizon Enterprise Solutions , tw telecom inc. (Nasdaq: TWTC) (previously Time Warner Telecom), British operator THUS plc (London: THUS), which is now part of Cable and Wireless plc (NYSE: CWP), and pan-European service provider Colt Technology Services Group Ltd .
And according to a recent Heavy Reading report, the "Carrier Ethernet Access Platform Quarterly Market Tracker," a combined Overture and Ceterus held nearly 30 percent of the Ethernet-over-TDM access gear market, putting it ahead of ANDA Networks Inc. and RAD Data Communications Ltd. , which rank second and third, respectively, in the market share table for the 12 months ended June 2008. (See Tracking the Ethernet Access Comet.)
According to the report, other vendors in that niche sector, which is set to grow in value from around $78 million in 2007 to more than $270 milion in 2011, include ADVA Optical Networking , Adtran Inc. (Nasdaq: ADTN), Allied Telesis Inc. , MRV Communications Inc. (Nasdaq: MRVC), Occam Networks Inc. (Nasdaq: OCNW), Raisecom Technology Development Co. Ltd. , Telrad Networks Ltd. , Turin Networks Inc. , and Zhone Technologies Inc. (Nasdaq: ZHNE).
The author of that report, Heavy Reading senior analyst and all-round Ethernet market hotshot Stan Hubbard, says the acquisition "appears to be a good strategic move to broaden the portfolio of the combined company and boost customer confidence in the vendor’s staying power through the economic downturn.
"The new Overture will have an even stronger presence in North America, where both companies generated most of their revenue, but it also has established a foothold in Europe with key players such as COLT and THUS."
Overture also boasts it has bought "an early leader in cell site backhaul" with its acquisition of Ceterus, which claims to have more than 30 customers using its equipment for backhauling traffic from mobile base stations.
Certainly Ceterus has targeted the increasingly hot mobile backhaul market with the launch of its UTS (Universal Transport System) 4000 product family, which, notes Hubbard, supports native Ethernet and T1 pseudowires over Ethernet, and which received MEF certification in October. (See this news release.)
In terms of market leadership, though, the likes of RAD Data, Ceragon Networks Ltd. (Nasdaq: CRNT), Harris Stratex Networks Inc. (Nasdaq: HSTX), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) are the companies that have made significant inroads with extensive wireless backhaul deployments. (See BT Uses Tellabs for Ethernet Backhaul, TeliaSonera Converges With RAD, Ceragon Expands in Africa, Zain Picks Harris Stratex, and Ceragon Wins Tata Deal.)
Overture and Ceterus aren't revealing any details about the value of the deal, their revenues, or whether they are profitable. Industry sources, though, suggest the two companies have a combined revenue base of around $45 million to $50 million a year and rising.
And the two companies have acted immediately to reduce their combined cost base. Overture says about 20 of the combined 110-plus staff have been cut "as a result of job overlap."
— Ray Le Maistre, International News Editor, Light Reading