Telecom equipment maker Avaya
Founded in 1993, Ubiquity develops session initiation protocol (SIP) communications software. Basically, this allows telecom carriers to use Internet-based technologies to offer communications services such as voice, video, and data. What's more, SIP tends to be a lower-cost approach.
The problem? Well, the sales cycle is grueling. For example, late last year, Ubiquity announced that it would show "significantly" lower revenues for the fourth quarter because several contracts did not get signed.
Also, it should be no surprise that Ubiquity has high customer concentration. About two-thirds of its revenues come from BT
Despite all this, Avaya is paying a high price for the company -- roughly 9 times revenues. Then again, Avaya is likely to monetize the acquired technology through its extensive customer footprint. During the past year, the company has generated roughly $4.9 billion in revenues and has more than 90% of the Fortune 500 as customers.
All in all, Avaya's purchase of Ubiquity makes sense to me. Internet-based communication is growing worldwide, and this should continue for some time.
Yet the fact remains that Avaya's competition is also bolstering its technologies. The company has rivals in Cisco