Wireless Infrastructure

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Belden Steals Trapeze For A Song

Belden picks up Trapeze for a cool $133M, even though Nortel would have appeared to have been the better suitor.

In a surprise announcement last Friday, Belden announced a $133M cash acquisition of Trapeze Networks. The surprise wasn't so much that Trapeze might be acquired -- privately held and not having had the same level of success as its fierce competitors, it was not altogether surprising -- but who purchased it. There are several enterprise networking vendors that OEM rather than own wireless product line (i.e., Extreme, Foundry, Juniper, etc.) that could have benefited from Trapeze's wireless expertise, no one more than Nortel Networks. Belden's justification for the purchase centered around the complementary nature of the acquisition, but the most obvious tie in would be an existing network equipment vendor, not a vendor who sells "signal transmission solutions." During a post-announcement conference call Monday morning with investors and analysts, Belden executives were asked several times to clarify what they felt were the "comprehensive and networking opportunities" and how it added "stickiness" and "entrenchment" to their existing product lines.

Their responses were unconvincing. It's one thing to sell cables and connectors, it's quite another to sell an enterprise networking solution with moving parts and software bits. Do enterprises typically consider buying their networking equipment from the same guys who sell them 1,000-foot spools of cable? Not often, and so Belden would be wise to retain the Trapeze name and associated brand recognition to keep their foot in the door.

Belden may have other plans, unfortunately, as the company made a point in its prepared remarks and commentary that Trapeze's customers purchase their wireless networking equipment because of its technical capabilities, suggesting that Belden believes it's not the brand name that counts as much as the ability to of the product to perform.

It's unclear what Belden plans to do with its technology partnership agreement with Extricom, made less than two years ago. Extricom hasn't been able to gain a measureable market share (although it would argue that its sales and unit counts aren't shared with market analysts, so how would they know) and Extricom's nontraditional approach to Wi-Fi may not have attracted as many Belden customers as company executives would have liked. Requests to Belden and Extricom for commentary were not answered by the time this was posted online.

Besides their view toward complementary product lines, Belden also appears to be looking for a way to raise gross margins in the potential face of declining cabling sales. In a written statement from Michael Tennefoss, head of strategic marketing, Aruba Networks states that "this acquisition validates that the transition to wireless is truly under way." But any short-term concern is likely overstated. While there's no doubt that structured cabling vendors will face increasing pressure, just like the paperless office, wire isn't going away and the transition to an "all-wireless" office will take many years and almost surely only at the edge. In any case, Belden appeared eager to inject its acquisition"s business into its own, stating repeatedly that Trapeze's operating margins exceeded its own. Belden executives declined to divulge Trapeze's margins.

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