The growth of voice over LTE (VoLTE) communications, as well as the accompanying developments in voice over Internet protocol (VoIP) and video over IP, have driven plenty of business decisions in the wider field. With that in mind, it's not a surprise to see more companies making moves in this sector, and it's not surprising that Spirent (News - Alert) agreed to purchase the technology business unit (TBU) of Radvision in a bid to augment some of its own offerings in that field.
The deal was valued at a reported $25 million in cash, funded from what was described as “existing cash resources,” and is expected to close between the next 30 and 60 days, following what was described as “customary closing conditions,” likely including regulatory approval. With the acquisition, Spirent gets its hands on not only a complete development suite of products for both voice and video over IP, but also VoLTE. Among the tools in question include a set of lab-based test tools known as the ProLab testing suite, which is designed to simulate a wide array of network conditions for the best understanding of how communications tools will work under which conditions. Further, Radvision (News 
- Alert) also offers up a set of protocol stacks for IMS and SIP, among others that can serve as a basis for rich media applications as well as the products that might incorporate rich media. The BEEHD video client software also comes into play, offering up a framework from which IMS-compliant services can be built and offered, and Radvision also has a complete voice and video services monitoring tool to help ensure that the network can handle such tools and, from there, improve the user experience.
That by itself was plenty of reason for Spirent to pick up Radvision's TBU, but there's a further detail that only serves as a layer of metaphorical icing on the equally metaphorical cake. Reports suggest that the acquisition is expected to have a positive impact on earnings, and fairly immediately, generating cash in the first full year—so probably not until 2015, but given that the company reportedly paid $25 million, this probably should be expected—and should ultimately pay for itself with a return on investment that actually exceeds the cost of capital.
Even if Radvision's TBU didn't offer a variety of tools that Spirent would find useful—and that's the case by itself—Spirent still would make a good move picking up the Radvision TBU as it's a currently profitable organization. Having a profitable organization is great for long-term earnings projections, and should the company have a downturn, having a profitable division on hand can minimize, or potentially even erase, losses. This looks to be a sound purchase all the way around, not only in its current state, but for what it could represent for the future.
Naturally, only time will tell what the full impact of Spirent's purchase of Radvision's TBU has on the company, but all the early word looks like it will prove to have been a wise purchase in the long term, and even in the short term.
Edited by
Maurice Nagle
