Dialogic's Deals - Veraz Merger is Complete and the Magic of Early October

Yes, it's early October and that means the magic of baseball playoffs in New York. Unfortunately, increasingly, and much to my disappointment, this has nothing to do with the New York Mets. But it's still exciting at this time of year since early October at Dialogic has typically been deal time, meaning, we've either announced or completed a deal - in 2006 (Dialogic assets from Intel), 2007 (Cantata), 2008 (NMS), and now 2010 (Veraz merger). On Friday, we announced the completion of our merger with Veraz Networks. The combined company will be known as Dialogic and is now listed on the NASDAQ under the ticker DLGC.

Since the agreement to merge was announced in May, I've been asked multiple times why we did this deal. People typically commented to me that they figured we'd do a deal, but didn't see a deal with Veraz coming. OK, that's fair enough, but let me explain why.

First of all, we like California and need to go there more and given Veraz is in California; it made sense! In all seriousness though, this does fit into the Dialogic strategy of expanding more into the service provider market. The combined Dialogic now has a very comprehensive portfolio of both multimedia processing infrastructure (which includes media server platforms, VoIP gateways, video gateways, and session border controllers) and call control infrastructure (softswitch and signaling). Dialogic has also touted for quite a few years the importance of security and session border controllers because of the emergence of border elements in general (i.e. IP to IP, including elements of media and signaling and security), and given Veraz has an SBC product, this now means Dialogic is squarely in this space.

And the Veraz portfolio is excellent. In fact, in June, Gartner published a Magic Quadrant for Softswitch Architecture and Veraz moved to the challenger quadrant "because of its focus on its core competency, as well as good execution in emerging markets and with alternative carriers." And the Veraz bandwidth optimized gateways give Dialogic an improved presence in the emerging optimization space.

From a technology perspective, we are clearly unique and differentiated in that we now have media processing, signaling, switching and security technologies and products. I honestly feel that no one else in the market has this breadth of technologies and products. It will be up to us to leverage all these assets appropriately, such as with building improved integrated border elements and marrying video and optimization technologies, but I am confident we will do so as we will be able to focus a larger engineering organization on this. So in a nutshell, the product sets all fit into our strategy.

This means our customers will benefit because they can now focus on their development and deployment competencies by leaving the complexities of network call control and media processing to us. Our customer base and prospect base can build out their networks, or build their value-added service solutions on Dialogic.

It's important to remember that even though this deal is about improving the service provider footprint for Dialogic, the enterprise segment is still forecasted to comprise about 40% of the overall revenue for the combined company, and we will remain focused on the enterprise customer base. We plan to continue with support of Project DiaStar^™ and associated telephony open source initiatives as well. At a higher level, the enterprise customer base will stand to benefit from this deal given that more and more enterprise applications are moving to the cloud, and there is potential synergy among the service provider relationships with Veraz.

It's up to us now to successfully integrate into a single Dialogic. We've done that successfully with each of our previous deals, and I'm confident we'll be able to do it again here and that the combined Dialogic will continue to serve your needs if you are a current customer, or will if you have not already worked with us.

And from our legal department, since this blog is somewhat forward looking, I have the following important message: This material is covered by the Dialogic Legal Notice and the Safe Harbor provisions set forth therein.