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Motorola buys media convergence software maker Leapstone Systems
By Colleen Taylor, Contributing Editor -- Electronic News, 7/10/2007
Mobile communications giant Motorola Inc. has added one more company to its growing arsenal of recent acquisitions aimed at giving the company more ground in the fast-growing premium video services realm.
The company announced today that it has signed a definitive merger agreement to acquire privately held Leapstone Systems Inc. New Jersey-based Leapstone is a communications software developer that provides a unified platform for creating, managing and delivering converged video, voice and data service bundles across multiple networks and devices. According to Motorola, Leapstone counts service providers AT&T and Verizon Wireless among its customers.
Terms of the transaction were not disclosed.
"Leapstone will contribute its leading intelligent service delivery and content management platform to Motorola, which will serve as our new engine for enabling seamless mobility experiences across applications, devices and domains," Dan Moloney, president of Motorola's home and networks mobility segment, said in a statement. "We're pleased to add the talented Leapstone team and their proven powerful software platform to Motorola's end-to-end content delivery portfolio."
The transaction is subject to customary closing conditions, including the approval of Leapstone Systems stockholders, and is currently expected to be completed in Q3.
The Leapstone deal is just the latest in a series of moves Motorola has made recently in an effort to create an integrated, end-to-end video delivery system for multiple network architectures. In April, Motorola inked a definitive merger agreement to acquire all the outstanding common stock of video processing solutions provider Terayon Communication Systems Inc. at a total equity value of approximately $140 million. And in May, Motorola signed a definitive merger agreement to acquire privately held video systems company Modulus Video Inc. for an undisclosed sum.
However, as it adds to its operations in some ways, the company has been making major workforce cuts that have had significant initial financial effects of their own, as it is cutting a total of some 7,500 jobs. In a filing Motorola made last week with the Securities and Exchange Commission, the company said that the 2,100 or so job cuts that it has made so far as part of those plans will result in a Q2 net pre-tax charge totaling approximately $101 million.
Motorola seems to be banking on recent research that suggests the company's video services efforts could very well pay off in the coming years. According to a recent report from market research firm iSuppli Corp., the premium video services market is expected to rise to $277 billion by 2010, up from less than $200 billion in 2006. The firm also projected that IPTV is set to lead the market's pack; revenues from IPTV alone are expected to increase to $23.5 billion in 2010, the firm said, rising at compound annual growth rate of 103 percent from $681 million in 2005.
