Dialogic/NMS Acquisition Discussion and Analysis

On a recent call with Jim Machi, senior vice president marketing, Dialogic (News - Alert) Inc., I had a chance to ask a number of questions regarding his company's pending acquisition of the platform division of NMS. The deal is subject to shareholder approval and comes a few weeks after NMS received a delisting notice from the Nasdaq exchange due to the company's stock price being under $1 for more than 30 days in a row.


Machi tells me the deal will allow the two companies to pool resources and as a result they should be able to get products out to the market faster than ever. He further cited the video and mobile value-added spaces as other areas where the companies will be able to compete more effectively as a standalone entity.

I asked Machi about the geographical ramifications of this deal and whether there are complimentary areas of the world which NMS brings to the table. According to Jim, Dialogic is very strong worldwide, so this was not a reason for this acquisition.

I asked if the deal has been in the works for a long time and Machi commented it was a normal amount, based on prior acquisitions. At this point, it is worth mentioning, since NMS is a public company, Machi is limited in what he can say.

I asked about integration issues and Machi told me they haven't started looking into it yet but based on past experience – these integrations are always challenging and will require work.

Machi told me some of the fastest growing segments of Dialogic's business are mobile and mobility as well as IP-based products.  He further explained value-added services, such as ringtones and video, are seeing nice growth levels as well.

On the economy, Machi explained that some customers are nervous and delaying purchases, but since the company is broad-based, they haven't seen severe impact.

From there I asked about whether there are opportunities for Dialogic's customers' customers to benefit financially from the products Dialogic makes. Machi did cite years of research which shows many of the solutions our industry has developed have been responsible for massive productivity increases. Voicemail is one example he mentioned and to that I would add IVR and the ACD.

Machi explained that even if some of these new products boost productivity and cut costs, companies can always put off purchase decisions for a quarter unless there is a pressing need.

This concluded my interview, but it’s worth mentioning the company will continue to look for organic and inorganic growth opportunities.

I got to thinking after we hung up that another benefit to customers from this acquisition will be dealing with a stronger company and we can further expect greater integration between Dialogic's current product line and successful NMS products.

When you think about it, NMS and Dialogic are two of the main companies who supplied DSP resource boards which allowed Internet telephony gateways to be built and sold in the late 1990s. In other words, much of the low-cost telephony we enjoy today has evolved from and in many cases is powered by technology invented and patented by these companies.

There is a rich legacy in the DNA of both companies and incredible brainpower at a company like NMS including company CTO Brough Turner (News - Alert) who has been a TMC columnist for more than a decade. The integration of these teams could really result in significant innovation. I wish both companies well in this transaction and I hope this acquisition turns out to be a win/win for all.