Tuesday, May 11, 2010

Veraz Networks and Dialogic to Merge

Veraz Networks and Dialogic will merge into a single company focused on communications products and services for the telecommunications service provider and enterprise markets. Under the deal, Veraz will issue shares of its common stock to each Dialogic shareholder so that following the closing of the transaction, Dialogic shareholders will own approximately 70% and Veraz shareholders will own approximately 30% of the merged company.

Veraz Networks, which trades on NASDAQ, supplies application, control, and bandwidth optimization products for service providers. The Veraz MGN separates the control, media, and application layers while unifying management of the network, thereby increasing service provider operating efficiency. The portfolio also includes its ControlSwitch, Network-adaptive Border Controller, I-Gate 4000 Media Gateways, the VerazView Management System, and a set of prepackaged applications.

Dialogic, which traces its origins back to 1984 and the beginning of computer telephony integration (CTI), currently supplies a range of media and signaling products for network equipment manufacturers providing video, voice, conferencing, and fax, along with network-edge infrastructure products. These products include TDM-IP voice and video gateways; SS7 and SIGTRAN signaling; and IP-to-IP border elements with security services, such as SIP mediation.

The companies cited a number of synergies driving the merger, including opportunities for video delivery solutions for service providers. Following completion of the merger, the new company, which will be called Dialogic, will have annual revenues greater than $250 million with gross margins of 60-65% and EBITDA of 10-15% of revenues.

"While the capability of mobile networks around the world has been steadily expanding, the future will bring even greater demands on the networks due to the unprecedented growth in global mobile data and video traffic," said Nick Jensen, Chairman of the Board and CEO of Dialogic. "By combining Dialogic's proven expertise in application enablement for voice and video with Veraz's leadership in voice, data, session control, security, and transport, we will be creating a company with innovative products that will enable our customers to unleash the profit of video, voice and data for 3G/4G networks."

Separately, Veraz Networks reported Q1 2010 revenue of $16.1 million, a 14% decrease over the preceding quarter and a 23% decrease over the first quarter of 2009. On a GAAP basis, net loss was $(5.2 million) or $(0.12) loss per share, as compared to a $(4.1 million) or $(0.09) loss per share in the preceding quarter and a $(3.0 million) or $(0.07) loss per share reported in the first quarter of 2009. At the end of the first quarter 2010, the company had cash, cash equivalents, restricted cash and short-term investments of $31.2 million and no debt. http://www.veraznetworks.com

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