Monday acquired broadband routing, switching
and cable modem termination system (CMTS) firm RiverDelta Networks Inc. for
$300 million in stock after the bell.
The final exchange ratio of the purchase of the Tewksbury, Mass. firm will
not be fixed until the cusp of the deal’s closing and will be based on the
average trading price of Motorola’s common stock at that time. Motorola,
browbeaten in the last month by a $759 million net loss in the
second-quarter to go along with a pledge to shed 4,000 more jobs, said the
deal was part of its initiative to offer broadband network operators an
end-to-end IP infrastructure network capable of supporting cutting-edge
broadband data, voice and video applications.
Schaumburg, Ill.’s Motorola plans to situate RiverDelta’s technology and its more than
200-staffer team under its Horsham, Pa.-based Motorola Broadband
Communications Sector (MBCS) umbrella, which was created when the No. 2
handset maker picked up General Instrument Corp. (GI) in January 2000. MBCS develops broadband solutions that
enable the delivery of interactive television, the Internet and phone
services over wired and wireless networks.
While MBCS will no doubt improve its ability to offer service providers IP
data-over-cable (DOCSIS), Voice over Internet Protocol (VoIP), and IP
streaming video, RiverDelta’s primary jewel is its cable modem termination
system (CMTS), a device cable TV firms use that exchanges digital signals
with cable modems on a cable network.
Just how does that fit into the equation? A data service is delivered to a
subscriber through channels in a coaxial cable or optical fiber cable to a
cable modem installed to a subscriber’s computer or television set. One
television channel is used for upstream signals from the cable modem to the
CMTS, and another channel is used for downstream signals from the CMTS to
the cable modem. When a CMTS receives signals from a cable modem, it
converts them into IP packets, which are then sent to an IP router for
transmission across the Web. When a CMTS sends signals to a cable modem, it
modulates the downstream signals for tranmission across the cable to the
cable modem. All cable modems can receive from and send signals to the CMTS
but not to other cable modems on the line.
It follows then that by bundling RiverDelta’s routing technologies into
Motorola’s existing CMTS business it will allow Motorola to broaden its
infrastructure footprint across system sizes and into regional IP network
applications. By melding the two outfit’s resources, Motorola hopes to
create a more efficient carrier-class CMTS solution with integrated routing
capabilities for broadband network operators who crave additional routers to
link the CMTSs deployed across their regions.
“This acquisition makes sense for both companies, because it strengthens our
ability to meet the needs of broadband network operators who are migrating
to high-availability DOCSIS 1.1 networks to deploy complex broadband
services like tiered data-over-cable, VoIP services, and IP streaming
video,” said Dan Moloney, senior vice president and general manager of
Motorola Broadband’s IP Systems Group.
The announcement is positive news a day before its annual analyst meeting in
Chicago, where industry watchers expect the firm will sound an upbeat note
despite its troubles. If the tech giant has any glow to bask in it is the
one provided by its Global Packet Radio Service (GPRS), or 2.5G, phone
progress. The phones are Web-enabled and Motorola, which claims it owns
about 15 percent of the handset market share, is the only organization to
bring them to market. Rivals Nokia
are slated to ship 2.5G
phones this quarter.
Motorola Acquires RiverDelta Networks for $300 Million