Watchmark takes on software division
ADC has announced today it has entered into an agreement to sell its Metrica service assurance software group to WatchMark Corp. WatchMark provides wireless service providers with software tools necessary to deploy and monitor services at the network, application and customer levels.
After the transaction is completed, WatchMark will assume control of the Metrica service assurance software offerings including approximately 250 employees, relationships with existing software customers and related facility space. The purchase price for the transaction consists of $35 million in cash and 3.2 million shares of WatchMark common stock, which represents less than five percent ownership of WatchMark. The purchase price is subject to adjustments for closing date working capital items. The transaction is expected to close in approximately 60 days and is subject to customary closing conditions.
The new company
The combined company will have the largest worldwide installed base of wireless service assurance products and will be headquartered in Bellevue, Washington. The transaction is expected to close within the next 60 days.
John Hansen, Chief Executive Officer of WatchMark-Comnitel announced that David Heaps, SVP and General Manager of the Metrica business unit, will become President and Chief Operations Officer of the company.
“A key growth strategy of our company has been to expand WatchMark-Comnitel’s product portfolio and services in order to become a leading supplier of service assurance solutions for the telecommunications market,” said John Hansen, Chief Executive Officer of WatchMark-Comnitel. “Our customers will benefit from stronger product capability, technical support, sales and service provided by the world’s leading wireless service assurance vendor.
“The combination of our two companies will result in significantly enhanced value to our customers as we go forward,” said David Heaps, SVP and General Manager, ADC Metrica. “Our combined global infrastructure, financial strength and technical expertise will enable us to further leverage our existing world-class products to address the advancing technical requirements in telecommunications service assurance.”
ADC’s business
“We are now 100% focused on ADC’s core strengths as a global network infrastructure company,” said Robert E. Switz, president and CEO for ADC. “Metrica, while a viable software offering, is not a strategic fit with our core strengths. Our strategic focus on the infrastructure layer of the network will enable ADC to serve our customers better and become the leader in this segment of the industry.”
“As a result of excluding Metrica results from ADC’s fourth fiscal quarter results from continuing operations, ADC’s preliminary estimate for sales is $243 to $253 million from continuing operations for the quarter ended October 31, 2004,” said Gokul Hemmady, chief financial officer for ADC. “The impact of the Metrica exclusion on earnings per share from continuing operations is estimated to be negligible in the fourth fiscal quarter.”
ADC’s network infrastructure products and professional services enable network operators to deliver high-speed broadband services to homes and businesses. The company’s high-performing connectivity equipment, wireless coverage and capacity equipment, wireline access systems, and professional services are relied upon by wireline, wireless, cable, broadcast, and enterprise networks around the world.
Metrica network performance and service quality management software solutions are designed to help service providers improve service quality, lower operational costs and optimize network usage and capacity. The applications include Metrica Performance Manager, which provides a complete view of network quality and usage; Metrica Service Manager, which enables the delivery of new services to drive growth; Metrica Service Assurance Framework, a modular and open framework that ensures Metrica solutions support innovation and competitive differentiation; and Metrica/NPR, which allows users to manage data from multiple vendors and forecast performance trends.
In the first three quarters of ADC’s fiscal year, Nov. 1, 2003 – July 31, 2004, Metrica sales were approximately $21 million with an operating loss of approximately $2 million, after direct expenses only. In ADC’s fiscal year ended October 31, 2003, Metrica generated sales of approximately $30 million and an operating income of approximately $5 million, after direct expenses only.