Tuesday, September 16, 2008

NextPoint bought by Texas firm Genband following funding

By Efrain Viscarolasaga

Seven weeks after raising $3.5 million of a projected $10 million round of private funding, and just eight months after the merger that formed the company, NextPoint Networks Inc. has been sold to Texas-based Genband Inc. for an undisclosed amount.

The deal is expected to give NextPoint, which was formed in January through the merger of Billerica’s Reef Point Systems Inc. and Maryland’s NexTone Communications Inc., a more stable foundation from which to compete in the growing wireless infrastructure space, but also expands Genband’s list of competitors to include other local session border controller and media gateway makers such as Burlington-based Acme Packet Inc. and Tewksbury-based Starent Networks Inc.

In a regulatory filing from late July, NextPoint reported raising $3.5 million of a $10 million round of funding from several investors, including New York-based One Equity Partners (a private equity division of JPMorgan Chase & Co.), Maryland-based American Capital Strategies and Washington, D.C.-based Core Capital. As NextPoint, the company also raised $20 million at the time of the merger last January. Prior to the merger, Reef Point, which was originally founded as Quarry Technologies Inc. in 1997, raised $64 million.

The deal adds NextPoint’s 150 employees, mostly split between the company’s Billerica and Bethesda, Md., locations, to Genband’s 600 employees.

NextPoint makes session border controllers and security gateways for both fixed line and wireless networks. According to officials, the company has remained second in the fixed line SBC market to Acme Packet for some time but has envisioned its growth opportunity in the wireless arena, where the move to an all-IP infrastructure and an increase of endpoints through new devices such as femtocells and dual-mode handsets is expected to present a growing opportunity.


“Where operators want to spend money is in the wireless network,” said Mark Pugerude, chief marketing officer for NextPoint in an interview last week.

The company has added a stream of new customers in the wireless space since the merger, according to Pugerude, including a place in Sprint Nextel’s domestic femtocell project Airave, through a partnership with Samsung Electronics Co.

While Acme Packet is recognized as the leader in the fixed-line SBC market, the wireless network is less mature, according to analysts, opening an opportunity for some equipment maker to take  control. For its part, Acme Packet has been diversifying its product line for the past year, releasing two products — a multimedia security gateway and an open session architecture platform — aimed at wireless networks. According to Kevin Mitchell, Acme Packet’s director of solutions marketing for its wireless unit, the company boasts about 50 customers in the wireless space.

“The wireless space is definitely behind the fixed space and represents a large opportunity for growth moving forward,” he said.

From NextPoint’s perspective, the acquisition by Genband is a positive, said Joe McGarvey, a principal analyst with Current Analysis in Washington, DC.

“There is synergy down the road with Genband’s media gateway business, and the additional resources associated with being part of Genband is attractive,” he said.

According to statements from Genband, citing research from Infonetics, the acquisition represents a $12 billion opportunity for the combined company over the next five years.