Spirent CEO Sees More Testing M&A
Talking with Light Reading in London recently, Burns said he expected to see a lot of test assets coming up for sale this year from companies who don't have the wireless sector as their core focus, or who simply aren't able to meet the demands of the large vendors and operators that use test platforms and facilities. "I expect to see assets for sale from companies that simply don't have the scale" to continue in the long term.
So does this mean Spirent is on the prowl? Burns said his company has looked, but "hasn't seen anything of interest" (yet), though he noted that there are plenty of other companies looking too, naming JDSU (Nasdaq: JDSU; Toronto: JDU) as a company he believes could strike some deals in 2010.
Burns believes the hot test sectors this year will be Long Term Evolution (LTE) (especially in device testing), applications testing (a market that has just seen some M&A action), 40GigE and 100GigE, and the cloud/virtualization and data center market. (See Fluke Buys ClearSight Networks, 3Com, Spirent Team in Data Center, Spirent Tests 40/100GigE, and Spirent Looks to LTE in Testing Times.)
Spirent has just started shipping a tool for testing LTE data cards, and is expecting to make good use of its new handset lab testing capabilities that simulate "real world conditions," said the CEO. (See Spirent Tests LBS.)
So is Spirent going head-to-head with its key rival Ixia (Nasdaq: XXIA) in the LTE test market? No, says Burns. Ixia's acquisition of Catapult gave it LTE base station testing capabilities, and that's not an area Spirent plans to move into, said Burns. (See Ixia Buys RAN Test Specialist.)
He believes the greater opportunity lies in device testing, and that the base station testing market is "more limited." But then, he would be expected to say that: Both Spirent and Ixia never miss a chance to put a negative spin on each others' prospects. For example, Burns said his company is seeing new opportunities following Ixia's recent acquisition of Agilent Technologies Inc. (NYSE: A)'s N2X business, as that deal is "creating new buying decisions" among the N2X customer base that will likely lead to some defections to Spirent. (See Ixia Splashes $44M on Agilent Unit.)
Spirent also has another foot in the LTE test market with one of its growing areas of business -- the mobile packet core. That particular niche was mentioned in the vendor's most recent financial report, when it noted that, during the third quarter of 2009, "customers increased their spending on applications and data center test capabilities, whilst investment in mobile packet core test grew markedly."
Burns said Starent, recently acquired by Cisco Systems Inc. (Nasdaq: CSCO), is a company that "has been pushing us hard technically" for some time, especially for subscriber emulation capabilities in 3G and potential LTE scenarios. The Spirent CEO sees the Cisco acquisition as "a positive" for the mobile packet core firm, and for Spirent.
— Ray Le Maistre, International Managing Editor, Light Reading