Enters strategic relationship on sales and support
Canadian company DragonWave is to buy Nokia Siemens Networks’ (NSN) microwave business for €15 million in cash and shares, to boost its microwave backhaul and transport business.
The NSN deal, scheduled to close in Q1 2012, will see NSN retain responsibility for its existing solutions sales and services for microwave transport, while DragonWave will be responsible for the product line, including R&D, product management and operations functions. The companies expect approximately 360 NSN employees, mainly based in Milan, Italy and Shanghai, China, to transfer to DragonWave.
Marc Rouanne, head of Network Systems, NSN, said that this “strategic relationship” approach would mean “customers would continue to receive high-quality services and sales support from Nokia Siemens Networks, while DragonWave’s best of breed products would ensure they have access to industry leading technology.”
Another way of looking at the deal is that DragonWave, a company hit by reduction in orders from major client Clearwire, has bought into NSN’s customer stream.
DragonWave’s revenue for the second quarter of fiscal year 2012 was $13.6 million, compared with $27.2 million in the second quarter of fiscal year 2011 and $11.0 million in the first quarter of fiscal year 2012. The company has cut its workforce by 10% over 2011.
Significantly, therefore, a statement from DragonWave said that the planned deal would “substantially broaden and strengthen DragonWave’s product presence in major mobile operators throughout the world through Nokia Siemens Networks’ extensive global sales channel”.
Peter Allen, president & chief executive officer of DragonWave, said, “This relationship is transformational, giving us the ability to serve customers who want to access an integrated solution. In addition, it provides DragonWave an expanded technology base to address those customers who wish to purchase stand-alone best-in-breed products.”
A recent report from Infonetics placed NSN in fifth place by market share (see chart above) whilst an operator survey also carried out by Infonetics rated NSN joint second (tied with Ericsson, behind NEC) for microwave technology leadership.
In October 2010 DragonWave paid $9.5 million cash for pseudowire specialist Axerra Networks. (http://mobileeurope.co.uk/news/press-wire/8193-dragonwave-buys-axerra)