JDSU Snaps Up Agilent Wireless Unit
Agilent's Network Solutions portfolio includes: service assurance probes that monitor carrier networks; lab and field protocol analyzers to test various wireless technologies (including Long Term Evolution (LTE), WiMax, Bluetooth, and 3G); and the E6474A drive test system that measures the performance of all types of wireless networks (including WiMax and LTE). (See Agilent Adds to LTE Drive Test Tools and Agilent Boosts LTE Test.)
The Network Solutions business generated revenues of $162 million in the financial year to the end of October 2009; is profitable at an operating level; has multiple major operator and vendor customers; and has 700 staff based in Colorado, the U.K., Singapore, and Beijing.
JDSU investors seemed positive about the move: The company's share price jumped 3.5 percent today to $8.55.
With wireless testing a relatively hot market -- and with the LTE test sector still to take off, but showing distinct promise as the move to next-generation mobile networks heats up -- why is Agilent selling? It says it "believes the business and its customers will be better served by a company that is focused exclusively on communications network test."
Agilent certainly isn't so focused: Of the $4.5 billion in total revenues it generated in the financial year ended October 2009, 80 percent came from Life Sciences, Chemical Analysis, and General Purpose (computer-related, aerospace and defense, and general industry) measurement products. And it clearly doesn't see a big future in communications testing, a market it described as "weak" late last year: In addition to its proposed sale of the Network Solutions unit, Agilent divested its N2X network testing line to Ixia (Nasdaq: XXIA) in October last year. (See Ixia Splashes $44M on Agilent Unit.)
The sale won't include all of Agilent's wireless test platforms, though: The company says it still has a number of products for mobile sector customers, including "test solutions for design automation, signal generation and analysis and protocol test. These include wider bandwidth, higher frequency, complex modulation and smart antenna technologies." Agilent notes specifically that its remaining portfolio includes LTE device testing tools.
The deal, set to close in the middle of this calendar year, will satisfy JDSU's aspirations to be a significant wireless testing player, adding the Agilent assets to its existing Ethernet backhaul testing tools. (See JDSU Seeks Wireless Test.)
It also boosts JDSU's claim to be the biggest telecom test systems vendor in terms of revenues (once this deal closes), as it'll be adding $160 million-plus in annual sales to its test-and-measurement revenues, which totaled $606 million in its most recent full financial year (ended late June 2009).
JDSU is not alone in seeing future growth in the sector: In addition to Ixia, Spirent Communications plc (whose CEO recently predicted wireless test M&A action for 2010) is also talking up potential gains in the mobile market. (See LTE Watch: Testing Times, Spirent Tests VZ's LTE Devices, Spirent Looks to LTE in Testing Times, and Spirent CEO Sees More Testing M&A.)
And there's a host of other companies with wireless test tools set to be displayed in Barcelona next week at the Mobile World Congress jamboree. (See Altair, Aeroflex Ink LTE Deal, AT4 Wireless Tests LTE, EXFO Monitors LTE, Azimuth Emulates MIMO, mimoOn Tests LTE, TD-LTE Femtos Put to Test, Ixia Shows Off at MWC, and SwissQual Tests TS's LTE.)
JDSU's move also marks the first announced acquisition in the service assurance space since Light Reading unveiled its new Service Provider Information Technology (SPIT) editorial initiative. (See Putting SPIT in Focus, The SPIT Manifesto, and Analysts: SPIT Is Hot Stuff.)
Mobile monitoring probes are essential to the service assurance strategies of all wireless service providers as they seek to optimize network performance and customer experience, making them one of the many important weapons in a carrier's SPIT arsenal.
— Ray Le Maistre, International Managing Editor, Light Reading
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