Fluke to Buy Visual Networks
Fluke is paying $1.83 per outstanding share, a 25 percent premium over Visual's closing price Thursday of $1.46. But that's considerably less than the $4.59 Visual's stock achieved in early February.
Today's news sent Visual's stock soaring by 33 cents, nearly 23 percent, to $1.79 in pre-market trading. The acquisition is subject to shareholder approval, and is expected to close in the first quarter of 2006.
Visual, which recorded revenues of $52 million in 2004, is expected to record an annual loss of about 7 cents per share on revenues of $45 million in 2005, according to average analyst estimates. It had 129 staff at the end of September this year.
The OSS firm has spent this year positioning itself as a VOIP monitoring systems player, edging into the test and measurement market in September with the launch of its VOIP Planner, an Ethernet appliance that generates and analyzes synthetic voice calls. (See Visual Debuts Planner , Visual Launches VOIP OSS, and Visual Offers New VOIP OSS.)
The acquisition will strengthen Fluke's position in the network and services monitoring market, a sector where Fluke, which used to be focused on systems used in equipment testing in labs, has been increasing its presence. It started announcing VOIP service test capabilities in April this year.
Adding Visual to its portfolio will certainly strengthen Fluke's position in the VOIP monitoring market, where it started launching products in April this year. And it's a market set to grow significantly in the coming years, according to research firm Frost & Sullivan, which estimates the market will be worth nearly $300 million in 2011, compared with just $50 million in 2004. (See F&S Reports on VOIP Monitoring.)
But why has Visual decided to sell up? The OSS firm's CEO, Larry Barker, told a conference call this morning that Visual needed to be part of a larger company because it was competing in the applications management market with much bigger global players "that could have put us out of business."
Although he didn't name these giants, Visual competes with the likes of Computer Associates International Inc. (CA) (NYSE: CA), Hewlett-Packard Co. (HP) (NYSE: HPQ), and Micromuse Inc. (Nasdaq: MUSE), among others.
Fluke, part of the Electronic Test business unit of Danaher Corp. (NYSE: DHR), markets a wide range of test and measurement gear -- from "cable testing products to broadband data services equipment and Ethernet and IP monitoring and analysis software and hardware" -- for telecom operators and enterprise customers, including AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). Its main strength is in testing fixed-access networks. (See Fluke Wins VDSL Tester Contract and Fluke Demos NGN Testing.)
Fluke's move is the latest in a string of acquisitions in the test and measurement market this year. (See Anritsu Branches Out With NetTest, JDSU Buys Into Testy Market, Tektronix Gets a Little TDA, and NetHawk Plucks VOIP Tester.)
— Ray Le Maistre, International News Editor, Light Reading
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