Mergers & acquisitions

Nortel Takes Tasman for $100M

Nortel Networks Ltd. will pay U.S. $99.5 million in cash for Tasman Networks Inc. , the companies announced this morning. (See Nortel Acquires Tasman.)

Nortel officials said that Tasman will be used to build its IP telephony and multimedia networking product lines, with a focus on enterprise networks. The routing technology will be used to support applications that include VPNs, firewalls, and quality of service.

Nortel officials expect the acquisition to close in the first quarter of 2006.

Tasman had been focusing on security and targeting low-speed edge interfaces such as T1 and DS3, competing primarily with low-end Cisco products in the 1700 to the 3700 range. Its biggest name carrier customer to date had been MCI LLC .

Tasman was founded in 1997, so calling it a startup might be a bit of a stretch. Over the years, it's undergone strategy shifts, a name change (it was formerly known as Tiara Networks), and more than six rounds of funding. (See Tasman: Lucky Seventh Round?.) The company took in more than $90 million in funding and went through several restarts, so it's unlikely the deal will be seen as a homerun for investors.

— R. Scott Raynovich, Editor in Chief, Light Reading

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javaos 12/5/2012 | 2:48:12 AM
re: Nortel Takes Tasman for $100M Nortel had its own secure router line - Contivity and still in development Dolphin. However the marketing and management messed up so badly and both products will vanish soon. But it is hard to believe Nortel can just acquire a no name player to fill the vacauum, especially the products does not offer any differenciator and Nortel has a poor tracking record integrating acquisiations. Just look at Tasman's history - strategy shifts, a name change, R&D moved from CA to India, I can almost picture the mess of the development. Well, stupid is as stupid does. Nortel is good at making mistakes to fix mistakes.
ragho 12/5/2012 | 2:48:11 AM
re: Nortel Takes Tasman for $100M
Interesting point, and this action is probably because there are still too many 'heads' at NT.

I agree that Contivity could definitely fill the [perceived] void, but alas, this is the scope of their communications across Enterprise and VoIP businesses. Having intimate knowledge of Contivity and comparing the data sheets on the Tasman products, I don't see any significant differences.

Almost 80% of the original Bay Networks' R&D has been run into the ground by NT. But this wouldn't be the first time--Clarify, Aptis, Xros, you name it.

IMHO, NT shareholders are best served by re-aligning the Optical, Wireless and VoIP/Enterprise businesses such that they could be divested once they reach individual profitability.

ozip 12/5/2012 | 2:48:03 AM
re: Nortel Takes Tasman for $100M Just as you thought it was over, Nortel needs another router! They obviously can't build them and they cleary dont know how to buy them.

materialgirl 12/5/2012 | 2:48:01 AM
re: Nortel Takes Tasman for $100M Maybe there is still hope for AVCI!
inauniversefarfaraway 12/5/2012 | 2:47:56 AM
re: Nortel Takes Tasman for $100M In yet another fruity hypothesis: authorities should consideer the possibility that nt is in cahoots with csco to destroy up-and-coming router startups.

Think about it:

nt buys multiple data networking companies, and can't hold on to a single one, yet continues to buy more. Even attempt to partner with jnpr in yet another boondogle.

csco and nt don't want jnpr to dissappear for fear of antitrust laws.

nt is incapable of developing anything resembling a router, except for a few products clearly demonstrating a high level of ineptitude.

nt management attempts to hire the two Garys, and dismisses them, thereby reducing the potential future threat to csco, since they are made out as religious fanatics in the process.

Meanwhile, csco can't make any inroads into wide scale consumer phone deployments. Is this a case of both companies agreeing not to encroach?

Rumored csco-nt marriage put off (nt doesn't want to be the -girl-)...

The great part to all this is that, with the unlimited support of Canadian taxpayers, and their EDC, this fun is going to go on for some time.

Maybe the correct way to explain the otherwise lunatic behavior of nt is to look at things in this way. Management recognizes they can't get it right, so they make the most of what they are best at: destroying things.

Following this theory, we will likely see some other press release in the new year, followed by admission of failure in about two years. More goodwill is on the way.
alchemy 12/5/2012 | 2:47:47 AM
re: Nortel Takes Tasman for $100M inauniversefarfaraway writes:
Meanwhile, csco can't make any inroads into wide scale consumer phone deployments. Is this a case of both companies agreeing not to encroach?

The only widescale new deployment of consumer wireline telephony in the United States is with the cable operators. Comcast, Time-Warner, Cox, and Charter combine to make up most of the market. Cisco has the largest single VoIP deployment in the world at Time-Warner (Time-Warner passed Vonage in Q4) and is one of two vendors at Comcast. Nortel has Cox. In terms of market share, Cisco has almost 50% and Nortel has barely north of 10%.

In the IMS space, Cisco has no product at all. In my opinion, that's because the Cisco/DynamicSoft dogma declared 3GPP "impure" so no resources were allocated to work on it. Nortel has busily been working away at it. Cisco is going to be forced to buy somebody to stay in the IMS VoIP game. My bet would be Ericsson.
zher 12/5/2012 | 2:47:43 AM
re: Nortel Takes Tasman for $100M Don't think Avici got any chances, seems after ATT was bought by SBC, Avici is dying.
zher 12/5/2012 | 2:47:43 AM
re: Nortel Takes Tasman for $100M neither selling routers.

I am seeing Tasman is following bay networks, shasta, and alteon

"If one router company doesn't work -- buy another! And another! "
donniall 12/5/2012 | 2:47:42 AM
re: Nortel Takes Tasman for $100M There are many puzzling (or alarming if you're an investor) things about this move:
- The infrastructure discussion concluded some years back. Practically all of Nortel's peers are trying to figure out how to deliver value-creating services across an IP infrastructure ..... Nortel, it would appear, are still trying to figure out how to put the 'boxes' together?
- If Tasman (which is no start-up) 'fills' a product gap, it begs the question of where that leaves Nortels existing enterprise product portfolio and IP strategy (-if indeed there ever was a viable IP strategy,
- the move signals Nortels determination to stay in the enterprise space ..... Why? In Nortels predicament I would imagine resources would be much better directed in areas where they stand a reasonable chance of competing - and cannot see Nortel ever providing a credible challenge to Cisco in the enterprise space. This battle has been fought and long won ...and Nortel are well and truly out-of-sight,
All in all, this is a high-risk and expensive (from Nortels position) 1995 "strategic" move - on the cusp of entering 2006. I think we'll see more radical shake-ups in Nortel during 2006 - and most probably more reductions .... just mho.

futureisbright 12/5/2012 | 2:47:36 AM
re: Nortel Takes Tasman for $100M "Almost 80% of the original Bay Networks' R&D has been run into the ground by NT."

It may be worth noting that NT's first mistake with Bay was buying it. There was not much to run into the ground in the first place, certainly not $6B worth. That being said, NT did make a good job running what it did get into the ground.
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