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VoIP Systems

What's NextPoint's NextMove?

Is NextPoint Networks Inc. following its post-merger plan, or planning to sell itself?

That's what some are wondering, as NextPoint, formed by the merger of Nextone and Reefpoint last December, has stripped down its headcount, eliminated regional offices, and outsourced many of its core operations. (See NexTone, Reef Point (Finally) Merging, NexTone-Reef Point Merger (Still) Coming, and NexTone-Reef Point Merger in Works.) The company says this has all along been a part of its post-merger strategy, but some think the company could be acquired soon.

Not too long ago, NextPoint's founder and CTO, Sridhar Ramachandran, left, and the company started outsourcing its engineering, sales, and support operations.

A NextPoint spokesman approximated the company's headcount to now be around 200 people. That's down from the approximately 300 employed at the time of the merger.

On top of all this, research and development, along with product development functions, are all being performed by another company, Global Logic. With headcount falling, offices closing, and operations being outsourced, what's left?

Brains, of course. "NextPoint is still the one with the ideas and the brains, while Global Logic is our arms and legs. It's not a complete outsourcing," NextPoint's spokesman says.

NextPoint won't comment on rumors that it is close to being acquired. But analysts were commenting all day long.

"I'm sure they will consider themselves to have intellectual property, but if you can't sell it in the market, then how can you value that?" asks Eric Kainer, an analyst with ThinkEquity LLC . "I don't know that they have a lot of alternatives."

One of the most logical suitors of NextPoint that Light Reading could identify is Genband Inc. Genband is acquisitive, and is considering adding a session border controller (SBC) and deep packet inspection (DPI) capabilities to its media gateway products. NextPoint has both technologies under one roof. (See Genband Fun Facts and Genband Gets a Gateway to NSN.)

"This would be a strong complement to some of the stuff [Genband is] trying to do in terms of media gateways and femtocells," says Joe McGarvey, an analyst with Current Analysis . "NextPoint just completed an exercise to streamline, so it certainly wouldn't be a shock to see this happen."

Heavy Reading senior analyst Jim Hodges agrees with the logic, saying that "there's been a bit of a move lately in the industry to include SBCs in media gateways."

"If I were to list five companies most likely to acquire NextPoint, Genband would certainly be on that list," says ThinkPanmure's Kainer.

NextPoint, again, won't address the M&A chatter. But it categorizes its downsizing as part of a strategic move into the wireless space. "There's been a push into the mobility space," says a company spokesman. "In order to push into that space you have to align your resources."

Thus continues a tumultuous summer for SBC vendors. Acme Packet Inc. (Nasdaq: APKT), one of the market leaders, recently announced that it would badly miss its second-quarter earnings projections. Sonus Networks Inc. (Nasdaq: SONS) has seen its largest investor express disappointment in the company's operations and has also seen a top executive depart. Meanwhile, Covergence Inc. just had a CEO change of its own. (See Acme Packet Gets Jittery, Investor Letter Takes Swipe at Sonus, Another Sonus VP Splits, and Covergence Names CEO.)

— Raymond McConville, Reporter, Light Reading

Raymond McConville 12/5/2012 | 3:36:34 PM
re: What's NextPoint's NextMove? Makes too much sense, does it not? What do people think?
tepes 12/5/2012 | 3:36:32 PM
re: What's NextPoint's NextMove? We purchased a Nextone MSX/RSM system 4 years ago. It was presented at the time as highly reliable and scalable solution. Turned out to be none of the above. We reported hundreds of bugs, upgraded to new versions dozens of times and the platform is still unreliable. They used us as guinea pigs all along and never managed to release a stable version in 4 years. Support was abysmal, higher up management had no idea what's going on below the surface. The only solution to any of our problems was to restart the system and do nothing else about it. I don't understand how a company like this can survive. They probably lied to their investors the same way they lied to us. There wasn't much in Nextone/Nextpoint to begin with, I'm pretty sure there's nothing left now.
Good luck to anybody who buys them!!!
ed_eds 12/5/2012 | 3:32:11 PM
re: What's NextPoint's NextMove? Merger Happened
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