NextPoint Analysis

December 11, 2007

If you meet David Walsh a partner with One Equity Partners, you immediately think banker. For those of you who may not frequent the tiny (and blisteringly cold when I was there) island of Manhattan, banker generally means investment banker. At a telecom conference you can always pick out the bankers because they dress nicer than most telecom types.

I recently had a chance to meet with Walsh and discuss the formation of NextPoint with him. Generally the “money people” are shielded from the communications and technology media as there are generally more technical people who are better at communicating with the “trade” media. So I was surprised when I was offered the opportunity to sit down with Walsh and discuss the formation of NextPoint.

To give you an idea of why David Walsh is different from most bankers, just look to his mini biography posted on the NextPoint website.

David A. Walsh assumes the role of Chairman of NextPoint. Having served on the board of NexTone since June 2005, he is a Partner with One Equity Partners (OEP), the private equity arm of JP Morgan Chase, and he is also Chairman of Vercuity and sits on the board of Last Mile Connections. Mr. Walsh was Chairman of WestCom, prior to the sale of WestCom in 2007. Before joining OEP, he served as President and COO of Global Crossing Ltd., and was Co-founder, CEO and President of IXnet, IPC Communications and Voyager Networks. Mr. Walsh also held various technology positions at the New York Commodities Exchange, Garban, Garvin Guybutler and Drexel Burnham Lambert Trading.

Walsh seemed extremely happy about the new combined company as it brings together the best of a session border control company in NexTone and an FMC company in Reef Point.

Both companies received investments from One Equity Partners so Walsh is familiar with them. He explained that when they invested in NexTone there were over ten SBC competitors and now they really only see Acme Packet as a competitor.

On the mobility side they have three competitors of which Airvana and Starent are included.

Walsh told me that if a carrier needs a converged access product, only NextPoint can offer a solution in a reasonable amount if time. In addition, NexTone has been expanding its sales organization for some time Reef Point products can now easily be cross-sold to customers.

He tells me that the customers of each company were generally in the market for products from the formerly separate entities. With this merger, it is now possible to give a migration path to all customers looking to grow their next generation networks.

Future acquisitions are a possibility and organic growth will be quite substantial according to Walsh as he says sessions are going off the chart. He sees a huge market with limited competition and thinks the new company is in a spectacular position.

As I walk away from the meeting I am certainly enthused about the market position the new company plays in and I am impressed by Walsh who obviously is a cut above a traditional investment banker.

So will NextPoint be the next blockbuster company in the market – a darling of the communications and financial media? It is unclear at this point. What is clear is that the new company has the potential to grow quickly as it plays in a rapidly accelerating space with limited competition. Let’s give it some time and see what Walsh and company can do with this new entity.