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VoIP Systems

Genband Splashes Out for BayPackets

With two acquisitions in 12 months, Genband Inc. is signaling that it doesn't intend to stay small forever. Today the former one-product wonder announced it is acquiring privately-held BayPackets Inc. for an undisclosed sum.

BayPackets, founded in 2000, is headquartered in Fremont, Calif. with facilities in New Delhi, India. The company has 91 employees, 69 of which are in India. It had raised $57.8 million in venture backing during its lifetime as an independent company.

BayPackets’ founder Sanjeev Chawla will become Genband's CTO and board member Alex Guira will join Genband's board. The rest of the BayPackets management team haven't as of yet announced their new jobs or departure dates.

BayPackets, known as a scrappy service delivery platform competitor, helped run a host of IP-based applications for wireless carriers, wireline operators, and broadband providers. The acquisition gives Genband, which started as a media gateway vendor, a couple more clubs for its IMS golf bag –- essentially giving it everything except a session border controller for next generation voice networks.

From Heavy Reading's IMS report last year, here's a summary of BayPackets' value to Genband, which wants to broaden its reach in IMS deployments:

The company has a wide set of partners, including strategic investors Intel and Lucent. Lucent signed a resale agreement with BayPackets in May under which Lucent will resell BayPackets SDPs and business VOIP applications as part of its own IMS solution. Other partners include IBM, Siemens, and Tekelec. BayPackets' Parlay/OSA gateway can be deployed in IBM BladeCenters and Sun Netra servers, among other platforms.

Bay sees its strengths as its ability to handle multiple protocols (SIP, Camel, IN, etc.), its highly scaleable servers, and its integration into a back-office environment.


With BayPackets in its bag, Genband will be able to sell wireless carriers service delivery platform-powered applications like prepaid and unified messaging solutions. For cable operators, the BayPackets deal will help Genband pursue the burgeoning cable VOIP market, which it first took aim at earlier this year with the acquisition of Menlo Park, Calif. softswitch vendor Syndeo Corp.

With the assets of Syndeo Corp. under their belts, Genband officials introduced two new IMS architecture and multimedia products this past spring, including the C2 signaling controller and S4 applications server. (See Genband on the Run.)

Thanks in part to its Syndeo acquisition, Genband now counts RCN Corp. , Canadian MSO Vidéotron Telecom Ltd. , and large Spanish MSO Cabovisão S.A. as prime cable customers. It also claims some larger, undisclosed U.S. MSOs, enabling its voice products to serve about 500,000 cable telephony subscribers worldwide.

Genband estimates its revenues to be about $33 million this year, growing to about $60 million next year.

Now Genband says it will put the BayPacket's suite of applications into a product called the M5 Multimedia Applications Server, which will give it signaling and services support across TDM and VOIP networks.

"This acquisition fundamentally changes us into a multi-product company with strong international traction," says Genband CEO Charlie Vogt. "This is a big step toward our corporate goals and will position us nicely as a strategic supplier of IMS solutions."

And, even though Genband's acquisitions are helping it broaden out, its original product, the G6 Universal Media Gateway, is getting a boost inside Verizon Communications Inc. (NYSE: VZ) as of late. The carrier this week confirmed that Alcatel (NYSE: ALA; Paris: CGEP:PA), Verizon's primary GPON technology supplier, is reselling the G6 as part of its voice integration solution. (See Alcatel Joins Verizon PON Party.)

In addition to Verizon, Genband's technology and its acquisitions have added several new names to its customer roster including Deutsche Telekom AG (NYSE: DT), SoftBank BB Corp. , and the long distance network of AT&T Inc. (NYSE: T).

— Phil Harvey, News Editor, Light Reading

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rjmcmahon 12/5/2012 | 3:42:45 AM
re: Genband Splashes Out for BayPackets Oh please! Vonage went public... what does THAT tell you... you know the old line Gilligan my boy..." A fool and his money... is a VC in Telecom!!"

Uhmm, didn't the VCs do just fine with VG? Aren't the fools those who bought from the VC's? VG today has a market cap 1.25B and has yet to earn a nickel. That's a flying pig by my book.
DCITDave 12/5/2012 | 3:42:44 AM
re: Genband Splashes Out for BayPackets Good points. Genband was recapitalized not too long ago and if the current investors were looking to flip the thing, would they would have done it before going on a buying binge?

Anyway, like Michael points out, they're not a big company and they're not a small startup anymore.

So what do they do? They have to be part of something bigger. Or get big by themselves.

ph
startup_shutup 12/5/2012 | 3:42:38 AM
re: Genband Splashes Out for BayPackets Most of Bay Packet employees should be laid off starting with useless management ....
alchemy 12/5/2012 | 3:42:38 AM
re: Genband Splashes Out for BayPackets Phil Harvey writes:
Good points. Genband was recapitalized not too long ago and if the current investors were looking to flip the thing, would they would have done it before going on a buying binge?

Buying binge? Syndeo couldn't have cost much. They'd been booted out of their only MSO account for non-performance (SS#7 didn't work) and were scrounging business out of that kiss of death country for telecom companies on the ropes, Japan. You'd end up with a bunch of source code and none of the people who wrote it. I'd be amazed if Bay Packets went for more than the liquidation preferences on their wash-out round.

The reality here is that media gateways are a commodity business with poor profit margins. Audiocodes buying NuEra for $75 million sets the valuation point. ...and NuEra had a very good product. If you can't move your business into higher margin products, you have no exit strategy. Companies looking for M&A deals want to add high gross profit margin products to their product portfolios. At face value, Syndeo and BayPackets make sense since your bill of materials is a Sun Netra and a CD-ROM. Superb gross profit margins. The trick is finding someone to buy those products.
materialgirl 12/5/2012 | 3:42:37 AM
re: Genband Splashes Out for BayPackets "Siemens and Dominate":
technoboy was right!
optiplayer 12/5/2012 | 3:42:36 AM
re: Genband Splashes Out for BayPackets "hmm, didn't the VCs do just fine with VG?"

Not necessarily. The VCs have yet to sell a share due to lock-ups. The early investors (and Citron) will do great but VG raised a huge round from the likes of Bain and others not too long before going public and my guess is that's not looking too good given the 50% drop in the stock.
startup_shutup 12/5/2012 | 3:42:29 AM
re: Genband Splashes Out for BayPackets Silicon Valley ranks dead last in ranking of U.S. tech hubs

http://www.mercurynews.com/mld...

RACHEL KONRAD
Associated Press
SAN FRANCISCO - Silicon Valley ranks dead last in an annual ranking of 12 U.S. technology hubs because of the region's notoriously high housing costs, traffic congestion, high unemployment rate and other quality-of-life problems.

According to the newest survey by Silicon Valley Leadership Group, the nation's top-ranked tech hub is North Carolina's Raleigh-Durham area, which enjoys relatively affordable housing and a thriving job market. The region also wins points for local kids' performance on eighth-grade math tests, as well as comparatively low sales taxes and affordable utility bills.

The No. 2 city is Seattle, home to thousands of well-paid technology professionals who work at Microsoft Corp., in suburban Redmond, Wash.

No. 3 was the greater Denver area, which despite a growing number of traffic jams and soaring housing prices is also home to many startups in the emerging alternative energy niche.

San Jose-based SVLG ranked its home region last for the second straight year - a dubious distinction considering that last year's list didn't include expensive cities such as New York or cities with struggling urban cores such as Philadelphia and Chicago, all of which finished higher than Silicon Valley this year.

"These results were a reality check on the challenges we all know we face here in the valley," said Carl Guardino, president and CEO of the public policy trade association, which represents more than 200 of regional, private sector employers. "There are seemingly intractable challenges we know won't change over a week or a year."

The valley - defined broadly as the region stretching from San Jose north to San Francisco and Berkeley, as well as corporate suburbs such as Cupertino and Palo Alto - fared particularly poorly because of its expensive homes.

Only 14.9 percent of local homes are within the price range of individuals earning the median income, according to a National Association of Home Builders survey included in the SVLG study. Only New York and San Diego fared worse.

By contrast, 65.8 percent of homes in the North Carolina tech hub were considered within the reach of those earning the median income.

Despite its dismal finishing, the valley remained dominant in one key metric: It attracts nearly $8 billion per year in venture funding, four times more than its closest domestic rivals. That includes $1.6 billion venture funds to "clean technology" and alternative energy companies.

Silicon Valley is also one of the few global tech hubs that dominates both the technology and life sciences industries, putting it above international tech hubs such as Basel, Switzerland; Bangalore, India; Prague; Dublin; Berlin; Tokyo; and Shanghai. Only Singapore rivals Silicon Valley in both segments - but the concentration of venture capital and tech companies there is far smaller than in the valley, SVLG reported.

The "Projections 2007" report, which will be released in its entirety next Wednesday, does not attempt to calculate the impact of weather, cultural attractions, proximity to the ocean and mountains or other intangibles that seduce many to California. Guardino acknowledges that the study may be unduly harsh on his hometown.

"A certain number of people would rather be here than shoveling snow in the Northeast in the winter or swatting bugs in the South in the summer," Guardino said.
Michael Harris 12/5/2012 | 3:42:23 AM
re: Genband Splashes Out for BayPackets Brutally honest, alchemy, but spot on.


=================================
Buying binge? Syndeo couldn't have cost much. They'd been booted out of their only MSO account for non-performance (SS#7 didn't work) and were scrounging business out of that kiss of death country for telecom companies on the ropes, Japan. You'd end up with a bunch of source code and none of the people who wrote it. I'd be amazed if Bay Packets went for more than the liquidation preferences on their wash-out round.

The reality here is that media gateways are a commodity business with poor profit margins. Audiocodes buying NuEra for $75 million sets the valuation point. ...and NuEra had a very good product. If you can't move your business into higher margin products, you have no exit strategy. Companies looking for M&A deals want to add high gross profit margin products to their product portfolios. At face value, Syndeo and BayPackets make sense since your bill of materials is a Sun Netra and a CD-ROM. Superb gross profit margins. The trick is finding someone to buy those product
mu-law 12/5/2012 | 3:42:22 AM
re: Genband Splashes Out for BayPackets You guys are killing me. The cPCI box with the audio codes cards in it?

Michael Harris:
"Brutally honest, alchemy, but spot on."

alchemy:
"Audiocodes buying NuEra for $75 million sets the valuation point. ...and NuEra had a very good product."
alchemy 12/5/2012 | 3:42:22 AM
re: Genband Splashes Out for BayPackets mu-law tells us:
You guys are killing me. The cPCI box with the audio codes cards in it?

With the limited amount I played with it, the NuEra value proposition was in their software. Lots of good tools to help troubleshoot problems. Decent stability in a space where many boxes are really flakey. It's just a media gateway. Why would you need to build it with exotic proprietary hardware when it's just TI DSPs, an Ethernet interface, and a circuit interface? It's supposed to be boring. That's why it's relatively low margin and why NuEra didn't sell for very much.
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