I'm starting to get a better idea why there is a lack of VOIP IPOs - before a company gets to go through the process, it gets snapped up. The latest "victim" is Sipura Technology Inc., which makes VOIP adaptors (a.k.a ATAs). It has accepted a US$68 million cash and options deal from Cisco, which will integrate Sipura into its Linksys SOHO division. This deal isn't a surprise given Sipura's founders also started Komodo Technology, which was acquired by Cisco in mid-2000 for US$175-million. When Jan Fandrianto and Dr. Sam Sin left Cisco to start Sipura, Cisco struggled in the ATA business. As a result, buying Sipura now makes complete sense if Cisco wants to stay in the game. Let's see how long Frandrianto and Sin stick around this time.
This deals comes on the heels of Juniper Networks buying Kagoor Networks for $67.5 million last month. Kagoor had sales last year of $5-million.
One day, it would be nice to see a VOIP IPO but maybe the capital markets landscape isn't friendly enough these days. Or perhaps small companies are troubled by the cost of being publicly-traded given the demaands of Sarbanes-Oxley. Maybe Vonage will be the IPO guinea pig later this year - although I believe it will be acquired before that will happen.

Reports about VOIP traffic being blocked by network operators are becoming more common in wake of Telmex customers complaining their telephony service is being degraded. In the United Arab Emirates, Internet users are complaining they have been unable to access Skype.com to buy SkypeOut minutes. The culprit seems to be Etisalat, the UAE's only ISP. In the U.S., there have been reports that Vonage's service is being blocked by Clearwire, while Madison River was fined $15K by the FCC after Vonage filed a complaint. In Canada, the major broadband operators have promised the CRTC they will not engage in this kind of nefarious activity.
Earlier this month, Vonage CEO Jeff Citron said he wants a broadband bill of rights to give consumers the right to access any service or application they want. While it is a self-serving approach, he makes a very good point about a troubling situation.

As part of its strategic appetite for more U.S. government business, Nortel is spending US$448 million to buy an IT services firm, PEC Solutions Inc. "Nortel is playing to win....," said Nortel CEO Bill Owens, who appears to have made this phrase a corporate mantra given how often it has appeared in press releases recently. PEC makes it money by selling consulting and system integration services to homeland security, law enforcement, intelligence, defense and civilian agencies. In 2004, PEC had profits of $16.4 million on sales of $202.7 million but its profitability has declined for the past two years. Nortel's willingness to snag PEC is reflected in the sweet premium it is offering. Nortel is offering $15.50 a share for PEC, which closed yesterday at $11.31 on Nasdaq.
It is an interesting deal for a couple reasons: one, it is focused on services rather than technology. As competition in the equipment market becomes more intense, services are now an important differentiator. Huawei, for example, can sell inexpensive equipment but it has a hard time matching blue-chip suppliers when it comes to servicing clients. While this is a logical move for Nortel, it stll has some technology holes to fill, particularly in the router and IP market. There are rumors the Neptune router may not make its official debut until later this year, while a partnership with Avici Systems appears to be struggling given Avici's troubles.