Acquisition of Mobile Virtual Evolved Packet Core Innovator Expands Brocade’s New IP Market Opportunities
Bangalore, March 4, 2015 – Brocade (NASDAQ: BRCD) today announced its intent to acquire Connectem, a privately-held company in the LTE virtual Evolved Packet Core (vEPC) market, in an all-cash transaction.
The continued explosive growth of traditional mobile data combined with emerging requirements around machine-to-machine (M2M) and Internet of Things (IoT) connectivity place new demands on mobile networks. To meet these challenges, mobile operators are looking to the power of virtualization to create flexible, scalable, and easy-to-deploy packet cores. Connectem provides highly-differentiated vEPC solutions with unique architectural attributes that leverage cloud computing, network virtualization, and software networking technologies to deliver higher scale and efficiency on industry-standard x86-based servers. Connectem software focuses on mapping mobile workloads to cloud resources, eliminating the constraints of physical equipment boundaries yet still maintaining the capablity to integrate with traditional node-based EPC architectures.
The acquisition of Connectem extends Brocade’s leadership in software networking and virtualized network functions, by enabling service providers and enterprises to offer ubiquitous connectivity between mobile and IoT devices, data centers, as well as public and private clouds. Connectem’s vEPC solutions integrate seamlessly with Brocade’s software and physical networking product portfolios to deliver industry-leading New IP data center infrastructure.
“This acquisition strengthens Brocade’s position in the networking industry as the adoption of software-centric networking continues to accelerate,” said Lloyd Carney, CEO of Brocade. “I am very pleased to bring this technology into our portfolio as we invest strategically in New IP across NFV and SDN to provide seamless data center and cloud solutions.”
“There is a step-function in scalability required to connect the billions of new devices joining the Internet of Things,” said Nishi Kant, CEO of Connectem. “As an early strategic investor in our company, Brocade recognized that a new architectural approach would be required to meet these demands. Connectem’s pioneering technology dramatically improves the flexibility, scalability, and total cost of ownership of mobile vEPC solutions. We are excited to realize the full extent of this vision as part of Brocade, a widely recognized leader and innovator in software networking.”
The acquisition of Connectem is another key component of Brocade’s transformative investment strategy, complementing the acquisitions of Vyatta, Vistapointe, and the recently-announced SteelApp virtual ADC product line from Riverbed. “This acquisition reaffirms our SDN and NFV strategy,” said Ken Cheng, CTO and Senior VP of Corporate Development and Emerging Business for Brocade. “We believe the Connectem technology is a key enabler for emerging markets including IOT, M2M, Industrial Internet, and enterprise mobile data services.”
Upon completion of the acquisition, Connectem will be included in Brocade’s Emerging Business Group reporting to Ken Cheng. Terms of the acquisition are not being disclosed, and it is expected to close in Brocade’s second quarter of fiscal 2015, subject to customary closing conditions and regulations. Following the acquisition, Brocade expects its FY15 financial performance to be consistent with the non-GAAP operating margin target of 25% provided during its fiscal first quarter earnings call on February 19, 2015.
This press release contains statements that are forward-looking in nature, including statements regarding Brocade’s anticipated time of the acquisition’s closing, anticipated strategy and future networking solutions. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations on the date of this press release and involve a number of risks and uncertainties which may cause actual results to differ significantly. The risks include, but are not limited to, the parties’ ability to close the transaction, changes in IT spending levels in one or more of our target markets including the telecommunications sector, Brocade’s ability to capitalize on new Brocade sales and marketing initiatives, Brocade’s ability to continue to successfully innovate new products and services on a timely basis and achieve widespread market acceptance, and the effect of increasing market competition and changes in the industry. Certain of these and other risks are set forth in more detail in “Item 1A. Risk Factors” in Brocade’s Annual Report on Form 10-K for the fiscal year ended November 1, 2014, filed on December 19, 2014. Brocade does not assume any obligation to update or revise any such forward-looking statements after the date of this release.