Ditech Buys VoIP Gear Maker Jasomi For $20 M

CHICAGO -- The Voice over IP equipment-market consolidation continued here at Supercomm Tuesday, when Ditech Communications Corp. announced plans to buy session border controller maker Jasomi Networks for $20 million.

The acquisition comes on the heels of Juniper's purchase of Kagoor Networks in March, a $29 million buy that is part of what is seen as a somewhat inevitable consolidation of discrete VoIP networking technologies into more-comprehensive offerings.

Session border controllers (SBCs) are devices that optimize voice-based traffic over an IP network, and can ensure secure connections between carriers, as well as between service providers and customers. Independent competitors still standing in the arena include NexTone Communications, Veraz Networks, Netrake Corp. and Sonus Networks.

"Ditech started offering a packet voice processor in March," said Chalan M. Aras, Ditech vice president of marketing. "We felt this [acquisition] would allow us to provide a more comprehensive solution."

While Ditech's packet voice processor offered companies transcoding, enhanced quality and toll-quality services at the borders of their VoIP networks, the company didn't offer the security and peering technology that Jansom's products offer, Aras added.Customers implementing VoIP networks want to be able to purchase both types of equipment from a single supplier because that helps ensure that the system will communicate smoothly with one another with no loss of quality, according to Aras. He said this interoperability challenge is one reason why carriers don't regularly offer service level agreements on VoIP networks.

Similarly, the acquisition will enable Jasomi to offer its customers a more comprehensive solution than it could before due to the company's small (25 employees) size, said Joel Fisher, Jasomi vice president of marketing and business development.

The two companies, both headquarted in Mountain View, Calif., had been in discussions since early this year, Aras said. Ditech chose to acquire Jasomi rather than one of its competitors due to the company's technical abilities, industry quality and size, Aras added. A larger company would have been difficult to integrate into Ditech's corporate culture. Ditech has about 200 employees.

Ditech will continue to sell the Jasomi PeerPoint line of SBCs and combine Jansomi's technology with Ditech's packet voice processor platform.

The acquisition is expected to close by June 30 and be neutral in terms of earnings per share, excluding purchased technology and other acquisition-related costs in the near term. Ditech doesn't expect the acquisition to result in a material deviation from the company's operating plan for fiscal 2006, exclusive of acquisition-related costs.The transaction includes $13 million in cash and $7 million in convertible notes. Ditech will also provide about $4 million for the assumption of options and the establishment of a restricted stock plan to issue restricted common stock to Jasomi employees.

The acquisition will be accounted for under purchase accounting and will be reported as part of Ditech's fiscal 2006 first quarter operating results.