Cheetah Grabs Symmetricom's V-Factor
Symmetricom Inc. (Nasdaq: SYMM) revealed last week that its video monitoring business had a buyer on the hook, but it didn't indicate that it was about to simply give the thing away.
But that's what it practically did by selling its video "Quality of Experience" (QoE) assets, headlined by the V-Factor platform, to Pittsburgh-based Cheetah Technologies LP for $2.25 million in cash. The deal is expected to close by mid-March, with 14 Symmetricom employees set to join the Cheetah team. (See Cheetah Snags Symmetricom QoE Biz.)
Symmetricom reasoned last week that it was shedding V-Factor so it could focus on its core business, which includes atomic clocks and a timing interface for cable's modular cable modem termination system (CMTS). (See Symmetricom Clocks Out of Video Monitoring .)
V-Factor hasn't factored much in Symmetricom's bottom line lately, contributing just more than $1 million during the company's fiscal 2009 financial period. Symmetricom entered the video monitoring business in 2007 through a $16 million purchase of QoSmetrics. (See Symmetricom Buys QOSmetrics .)
But what Symmetricom viewed as an albatross, Cheetah sees as a potential growth opportunity and a new line of business that will lock horns with JDSU (Nasdaq: JDSU; Toronto: JDU), EXFO (Nasdaq: EXFO; Toronto: EXF), IneoQuest Technologies Inc. , and Mixed Signals Inc.
Cheetah CEO Stephen John believes his company can generate revenues five to 10 times higher than Symmetricom has gotten from the product line. Part of the reason, he says, is that the product, which has been mostly used in tests and trials, is now ready for commercial deployments.
He says Symmetricom's technology is already in trials with four of the top five U.S. cable MSOs. In total, there are 21 MSOs, telcos, and programmers that have deployed or tested the system, including Telecom Italia (TIM) , Orange (NYSE: FTE), and NTT Group (NYSE: NTT).
"We believe [this deal] is a huge growth opportunity for Cheetah," says John, a cable vet who helped Charter Communications Inc. launch its business services division.
Cheetah reemerged as a standalone company last year when it picked up Tollgrade Communications Inc. 's cable status monitoring business for $3.15 million. Tollgrade bought the Cheetah product line from Acterna (now part of JDSU) in 2003 for $14.3 million. Acterna bought Cheetah (the first time it was a standalone company) in 2000. And that wraps up today's cable history lesson.
The current version of Cheetah (without Symmetricom's assets factored in) has about 33 employees, with annual revenues in the range of $15 million to $25 million, according to John.
— Jeff Baumgartner, Site Editor, Light Reading Cable