Mergers & acquisitions

2006 Top Ten: Cable Tech Deals

Waiting to see how BigBand Networks Inc. (Nasdaq: BBND)'s IPO performs? Waiting for Cisco Systems Inc. (Nasdaq: CSCO), Motorola Inc. (NYSE: MOT), Harmonic Inc. (Nasdaq: HLIT), or somebody else to buy Terayon Communication Systems Inc. ? Waiting for Arris Group Inc. (Nasdaq: ARRS) to buy anybody?

Well, so are we. And while we wait, let's take a quick look back at the biggest cable tech deals of 2006:

10. Moto Woos Swedes
Motorola started off the year in fine form last January by gobbling up Swedish IPTV set-top maker Kreatel Communications AB . Did Kreatel throw in a couple of massages to pump up the price? No one's saying. (See Motorola Acquires Kreatel.)

9. Moto Taps King Tut
Another Moto deal of note was the buyout of video encoding vendor Tut Systems Inc. (Nasdaq: TUTS) for $39 million in cold cash. In particular, the move enhances Moto's MPEG-4 product lineup and expertise because Tut is one of the few vendors that's actually deployed the new video format. (See Motorola to Buy Tut.)

8. SeaChange, Comcast Go Steady
Despite several wild rumors, SeaChange International Inc. (Nasdaq: SEAC) didn't buy anybody or get bought up last year. But the leading VOD vendor did notch a deal with Comcast Corp. (Nasdaq: CMCSA, CMCSK) that commits the humongous MSO to purchasing at least $45 million in SeaChange products and services through the end of this year. Nice one. (See Comcast Boosts SeaChange Revenues.)

7. Harmonic Hums Entone's Tune
Like Motorola, Cisco, and the other big guys, Harmonic wants to frolic in the telco TV space. In a deal largely overshadowed by Cisco's purchase of Arroyo announced on the same day, Harmonic shelled out $45 million in cash and stock for Entone Inc. 's video networking software business last summer. Even without Entone, Harmonic boasted that it's already winning more IPTV headends in the new MPEG-4 format than Cisco. (See Harmonic Spends $45M on Entone VOD-Ware.)

6. Moto Swallows Vertasent
Motorola just couldn't get enough switched digital video expertise during 2006. In late September, Moto scooped up Vertasent LLC , a privately owned software firm boasting edge resource management that lets cable operators manage bandwidth and content for both switched digital and VOD. Vertasent's software also allows MSOs to engage in something called "edge QAM sharing," which sounds vaguely illegal. (See Motorola Buys Vertasent.)

5. Cisco Takes Out Arroyo
You didn't think we'd forget about Cisco, did you? Not a chance. Fresh off its megabucks buyout of Scientific Atlanta in late 2005, Cisco swooped in to snatch Arroyo, everybody's favorite VOD startup, for a relatively low $92 million in late August. Filling one of Cisco's few admitted portfolio gaps, the deal gives the tech giant key software for VOD, switched digital, and IPTV applications. (See Cisco Snatches VOD Vendor Arroyo.)

4. BigBand Seeks Gold
Okay, so it's not exactly a deal, strictly speaking. Still, the much-anticipated filing of BigBand's $140 million IPO closed out the year with a bang and set the bar for possible future M&A deals. Still to be decided is whether BigBand will end up being a bigger tech player or a bigger tech target. (See BigBand Files for IPO.)

3. Moto Steers Broadbus
Of all the deals struck by Motorola in 2006, this one probably attracted the most attention because of Broadbus Technologies Inc. 's status as everybody's other favorite VOD startup. Moto plunked down a pricey $186 million for Broadbus, whose B-1 bombers… uh, video servers can be used for switched digital and IPTV as well. It also doesn't hurt that Broadbus is partly owned by Comcast, one of Motorola's biggest customers. (See Motorola Scoops Up Broadbus.)

2. Moto Captures Netopia
In its next-to-last deal of 2006, Motorola splurged $208 million in cash for Netopia Inc. to strengthen its IPTV offerings. Netopia, a Silicon Valley firm that churns out DSL modems, routers, and gateways, will fill yet another hole in Moto's product portfolio. Netopia will also contribute its remote management and support software for telco customers to its new parent. (See Motorola Gobbles Up Netopia.)

1. TW, Comcast Carve Up Adelphia
After waiting months longer than expected for FCC approval, Time Warner Cable Inc. (NYSE: TWC) and Comcast finally got to carve up Adelphia Communications like an early Thanksgiving turkey in early August. Although this wasn't a cable tech deal per se, it has already started spurring hundreds of millions of dollars in fresh spending on vendor equipment as both MSOs race to upgrade the old, dilapidated Adelphia systems. Analysts expect a number of key equipment suppliers, including Arris, C-COR Corp. (Nasdaq: CCBL), and CommScope Inc. , to benefit from the windfall over the next two or three years. (See Adelphia Deal May Help Three Tech Vendors .)

Stay tuned. More big deals will undoubtedly follow in 2007 as the current cable consolidation craze continues.

— Alan Breznick, Site Editor, Cable Digital News

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