Covad Acquired by Platinum Equity

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Covad Acquired by Platinum Equity

Covad was recently sold to private equity and this could be a good thing. The company made a big splash in the business VoIP segment years back but more recently Covad seemed to stop focusing on offering converged services and instead shifted the bulk of its messaging to broadband.
 
Part of the reason for this shift may have been service issues as I have heard complaints of poor voice quality from some of my readers over the years.
 
As a point of comparison -- during the last year, when Covad stopped focusing on the VoIP market, a competitor who is in the pure-play hosted VoIP space Cbeyond saw its shares rise over $11 or 36%. Cbeyond is now valued at $1.18 billion dollars in fact while Covad is valued at $191 million.
 
The new owner of Covad is Platinum Equity and some advice to the new company would be stay consistent. Promoting yourself as the ultimate IP communications solutions provider and then going dark for over a year sends a poor message to potential customers.
 
I started off this entry by saying this purchase could be a good thing and this is why. Over the last year or so the company has been pretty rudderless. They need to decide on branding, messaging and then follow through.
 
Oftentimes, when a company is up for sale it ceases marketing. This is possibly what happened in this case.
 
A change in ownership oftentimes is what is needed to turn things around. After all, the Covad brand is definitely well-known and if you can combine this with a consistent message and hopefully a refocus on IP communications, the company has nowhere to go but up.


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