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VoIP Systems

Cedar Point Snags Growth Funds

Cedar Point Communications Inc. 's existing backers, including Comcast Interactive Capital , have made $3.4 million in debt facilities available to the vendor to help it pursue new growth opportunities in 2010, a move that dampens persistent rumors that the VoIP gear and software maker is a near-term acquisition candidate.

A Securities and Exchange Commission (SEC) document filed November 24 reveals that Cedar Point has taken $2 million of the agreed $3.4 million debt financing on offer.

Cedar Point director of marketing Jim Gayton confirmed that all of the vendor's existing VC partners, including the Comcast investment arm, Battery Ventures , Charles River Ventures , Motorola Inc. (NYSE: MOT), and Ascent Venture Partners , participated.

"In this economy and this market, we're absolutely thrilled to get a vote of confidence from our existing investors," he said.

But, hold on. Why does a nine-year-old company that's raised $85 million need a relatively measly $2 million more, with another $1.5 million set aside in reserve?

Privately held Cedar Point doesn't divulge revenues or its cash position, though it's believed the company generated revenues of $60 million last year, and won't see much more than that in 2009.

According to Gayton, Cedar Point doesn't need the new windfall to fund more research and development, but instead wants to have it on hand to ensure there's more than enough fuel in the tank to go after sales opportunities both in the U.S. and abroad.

"This is just an incremental investment to handle the growth we're planning on for 2010," he said, noting that Cedar Point is already pursuing a "significant number" of RFPs (requests for proposal) across the globe. "We want to make sure we have the cash available to secure that business."

Cedar Point thinks a sizable number of those opportunities will bloom in Europe, where the vendor recently landed a big deal with Kabel Deutschland GmbH , Germany's largest cable operator. (See Kabel Deutschland Rings Up Cedar Point.)

Heading into 2010, Cedar Point expects there will be high interest in upgrades to PacketCable 2.0 and IP Multimedia Subsystem (IMS) capabilities, technology the company is baking into SafariFusion, the follow-on to the vendor's flagship VoIP system, the SafariC3. (See Cedar Point Softens Up, Tries On IMS .)

Cedar Point has not announced deals for SafariFusion, but it expects trials by mid-2010 and revenues by late next year. "This [product] is really setting the table to drive customer acquisition," Gayton claims. Although the majority of the near-term opportunities are in the EMEA (Europe, the Middle East, and Africa) region, he says Cedar Point is also pursuing new deals in North America and in the Caribbean and Latin America.

For now, the vendor isn't making a big push into the Asia Pacific, where it'll "be opportunistic," he adds.

Off the table?
Although the new round of debt isn't large, it does cool speculation that Sonus Networks Inc. (Nasdaq: SONS), or another potential suitor, might try to buy the Derry, N.H.-based VoIP company. (See Sonus Looking at Nortel Assets, Cedar Point.)

"I can't see any buyers for them [Cedar Point] at this time," Avian Securities LLC analyst Catharine Trebnick says, though she still doesn't rule out an acquisition longer-term.

However, the fact that Cedar Point is competing against large foes such as Huawei Technologies Co. Ltd. makes the company "a tough sell," she adds.

But Trebnick says the good news for Cedar Point is that revenues appear to have stabilized and its expenses are now under control.

The situation there wasn't so rosy in the first quarter, when Cedar Point laid off 15 percent of its workforce in the midst of a cable buying slowdown. (See Cedar Point Cuts Staff as Slowdown Bites.)

— Jeff Baumgartner, Site Editor, Cable Digital News



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