First there is a date. If sparks fly, the romance eventually may graduate into a union. But in the wireless business, not all mergers and acquisitions result from long-standing engagements, evidenced by several recent such deals.
“It’s not always a necessary condition,” said Ned Hopper, vice president of corporate business development at Cisco Systems Inc. The networking giant can attest to this in its September acquisition with Dynamicsoft, a Session Initiation Protocol company with which it did not have previous business.
Perhaps more common are deals like Qualcomm Inc.’s recent acquisition of display technology company Iridigm Display Corp. for $170 million in cash. The acquisition was the culmination of an ongoing relationship, where Qualcomm bought the 86 percent of the company that it did not already own. Qualcomm already had taken part in two earlier financing rounds for Iridigm. Iridigm makes a product called iMoD, which “can reduce power consumption and cost of color displays and increase performance,” according to Jeff Belk, Qualcomm senior vice president of marketing.
Earlier this month, Alcatel Corp. said it acquired Spatial Wireless for about $250 million in shares. Spatial Wireless makes software-based and multi-standard mobile switching solutions, which control media gateways and manage call and session control for voice and data services. The company said the relationship between both companies goes back a few years and the acquisition is a culmination of a fruitful climax of their work together.
Cisco’s Hopper identified the first of his company’s two acquisition strategies as the market expansion deal, which includes acquiring innovative products and technologies that can fit into Cisco’s existing business. Companies that fit this model include Parc Technologies Ltd. and Netsolve Inc. Cisco had a measured relationship with each prior to acquiring them. Parc Technologies developed traffic engineering solutions and software to optimize routing. Netsolve’s solutions monitor, manage and secure information technology infrastructure.
The other strategy Cisco employs focuses on new market-entry deals, according to Hopper. Linksys Inc., which makes routers and access points, did not have a relationship with Cisco beforehand.
Cisco’s acquisitions often arise from the rubbing of minds between the engineering and sales divisions of the company, adding that factors, such as brand recognition, channel reach, vision and cultural compatibility come into play, Hopper said.
Nokia Corp. has acquired companies for some of the same reasons Hopper highlights for Cisco. Nokia has acquired up to 22 companies since 1997, according to company spokeswoman Laurie Armstrong. One of the first was Ipsilon Networks Inc., a provider of Internet Protocol tools. Nokia had a minority share in the company before it acquired it. Two other recent Nokia acquisitions, one for technology from Metrowerks and the other of Eizel Technology Inc., resulted from some level of relationship before the deal. Nokia purchased Symbian operating software development tools from Metrowerks, which used to be a Motorola Inc. subsidiary. But another Nokia acquisition, of Sega.com, which provided multimedia services, didn’t spring from a prior relationship.
